Are subsidiary companies robbing FE staff of pay?

Colleges are setting up subsidiaries to hire staff on inferior contracts, according to UCU

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A "shadow FE sector" of subsidiary companies in further education colleges has been formed to employ teachers on inferior and "precarious" contracts, the University and College Union (UCU) has said.

According to the union, almost 60 FE colleges in England have now set up companies, and some are using them to hire staff to deliver college teaching.

The union’s report “Precarious teachers: insecure work in the English further education sector”, published today, said that a “subset of FE colleges” is using the companies to create “a shadow FE sector”, allowing them to employ existing staff without giving them the same rights as permanent staff members. These employees’ rights include protection from unfair dismissal, the right to redundancy pay and maternity leave, and being part of a teachers’ pension scheme.

Colleges argue that creating subsidiary companies is a way to deliver an enriched range of activities or to distinguish between commercial and charitable activity.

'The trickery of subsidiary companies'

According to Jonathan White, a bargaining policy and negotiations official at the UCU, subsidiary companies are being used to issue new contracts to staff and slowly “carve off a little bit of the college’s business” at a time.

The college pays the company a fee for any staff that it recruits, and the subsidiary company will make a profit. The company then gift aids the profit back to the college, he explained.

Chris Jones, vice-president of UCU Wales, said: “What I have seen is the trickery of these subsidiary companies. And let’s be precisely clear why they’re being set up: they’re being set up to avoid proper pay scales, to avoid teachers’ pension arrangements, to reduce pay and conditions and to undermine the efficacy of this union. That’s why they’re being set up, it’s as simple as that.”

The UCU’s report showed that, overall, more than 17,000 teaching staff in FE colleges were on an insecure contract in 2016 – 28 per cent of the teaching workforce (see below).

This is an edited version of an article in the 9 June edition of TesSubscribers can read the full story here. To subscribe, click here. To download the digital edition, Android users can click here and iOS users can click here. Your new-look Tes magazine is available at all good newsagents.

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