Supply teachers

Supply teachers plan Post Office-style legal action to take down umbrella companies

The National Supply Teachers Network to take group litigation over unlawful salary reductions and missing holiday pay

The National Supply Teachers Network to take group litigation over unlawful salary reductions and missing holiday pay

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Supply teachers are exploring “Post Office-style” group litigation to take on umbrella companies over unlawful deductions from their salaries and missing holiday pay.

The National Supply Teachers Network (NSTN) is in talks with legal firm Contractors for Justice (C4J) with a view to taking supply agencies to the High Court.

Some agencies use umbrella firms to employ temporary workers, meaning they do not have responsibility for employment costs such as pension contributions and sick pay. But unions have long objected to a plethora of issues with such arrangements. 

According to the Trades Union Congress, problems include “misleading” deductions from workers’ pay, “widespread” breaches of holiday pay and some workers even becoming “unwittingly embroiled in tax evasion schemes”.

Rising illness levels since Covid have seen demand for supply teachers soar. Local authority-maintained schools spent about £698 million on supply costs last year, up 12 per cent.

But Niall Bradley, chair of the NSTN, said: “Supply teachers are being paid so little they can almost do any other job and make more money. They are leaving teaching because it’s just not paying enough to continue.”

Niall Bradley

Those in England are on average paid 40 per cent less than full-time teachers, Bradley said. But umbrella companies can slice another 20 per cent from their pay, he added.

The group litigation order (GLO) would see supply teachers with similar claims band together in an attempt to reclaim deductions from their wages and withheld holiday pay.

It is the same type of action taken by the 555 postmasters against the Post Office over the Horizon IT scandal in 2017.

Susan Pash, C4J’s chief executive, said that, while they would need around 500 supply teachers to make the case “viable”, she expects more than a thousand to sign up. But it could take up to a year to build the case.

HMRC consulted on umbrella firms crackdown

A survey last year by the National Education Union of 2,700 members found 22 per cent were paid through an umbrella or offshore payroll company. This is down from a high of nearly half of respondents in 2015.

HM Revenue & Customs recently consulted on umbrella firm crackdown plans. It  estimates the number of people working in such arrangements across all sectors is now at half a million.

In 2016, the NASUWT union raised concerns about the “way supply teachers are trapped into working for agencies that force them to join an umbrella company to get work”.

The NSTN wants agencies to stop using umbrella arrangements and “routinely pay teachers tax-efficient, accrued holiday pay during the school holidays”.

C4J is offering to work for the supply teachers on a “no win, no fee” basis, but would take a 35 per cent cut of any potential compensation won.

Class action specialist David Greene, a senior partner for Edwin Coe LLP, cited a Supreme Court decision in October in which Northern Ireland police officers won a holiday pay case against their employer.

According to Greene, it seems that C4J has established in law that someone in the supply chain has liability, but that will be a matter on which the court must rule.

‘Deflated, despondent, in despair’

Anne-Marie Dooley, who worked as a supply teacher from 2015 to 2022 before leaving the profession to work as a tutor, intends to join the GLO.

She worked for eight agencies in total and was paid via at least two umbrella companies. Payslips from 2016 show one company took a £16 margin fee plus employers’ national insurance contributions in excess of £60.

But in 2017, she was hit with a £1,046 tax bill from HMRC. She said an umbrella firm was culpable, but she had to pay it back over three years.

This left her feeling “deflated, despondent, in despair but, most horrifically in dire debt due to poor pay and conditions”.

HMRC declined to comment on individual cases but said it will respond “soon” to the consultation on how to better regulate umbrella firms.

Kate Shoesmith, deputy chief executive at the Recruitment and Employment Confederation, backed regulation, adding: “HMRC needs to do far more with the powers it already has.”

But she said the growth of umbrella firms was driven by supply teachers and agency choice. “Many agencies do not work with umbrella companies and this leaves supply teacher contractors with options,” she added.

Geoff Barton
Geoff Barton

Geoff Barton, general secretary of the Association of School and College Leaders, said supply teachers “deserve to be properly and fairly remunerated”.

He added: “In the midst of a retention and recruitment crisis, supply teachers play a more important role in our schools and colleges than ever.”

Bradley urged people who wish to join NSTN and the GLO to sign up to the network.

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3 Comments

  1. C Bentley

    The resurgence of agencies and advent of umbrella companies has been damaging for the workforce, with significant ‘fees’ deducted from what they have earned.
    The rate I have been paid at hasn’t changed in 9 years – shameful.
    As always, those with resources profit from ordinary folk