Outsourcing is a sham – The IWGB’s case could help clean it up

From unlawful deduction of wages to discrimination, outsourced workers are experiencing huge problems

This article is written by Emiliano Mellino

There are many ways in which neoliberalism has developed convoluted structures to hide the truth behind unsavoury arrangements. Over decades, armies of lawyers and lobbyists turned what would be illegal tax evasion into legal “tax avoidance”, while shell companies hide the real owners of vast swathes of the London property market.

Then there is outsourcing. Much like the companies that make their profits in one country but pay their taxes in another with a much lower effective rate, outsourcing creates a convenient fiction.

The idea, which first gained traction in the 80s under the Thatcher government, is that by having our offices, schools and government institutions hire facilities management companies to handle the provision of essential services, from cleaning to maintenance, these services will run more efficiently and to a higher standard.

So while cleaners or receptionists might work in a university, have lunch in its canteen, and at times even get instructions from its managers, they don’t really work for the university, instead they work for a facilities management company that is based hundreds of miles away and whose offices they have never even seen.

If at first glance it doesn’t seem like the most obvious path towards efficiency, That’s because many times it isn’t. When Queen Mary University opted to end outsourcing and hire cleaners directly in 2009, it discovered that the quality of service increased while barely affecting cost. Another London university, SOAS, will stop outsourcing all its essential services from September and a report from the Association for Public Service Excellence concludes that providing these services in-house should be cost-neutral in the medium term.

However, these examples of bringing workers back in-house are the exceptions to the rule. Most institutions in the UK, much like hipsters in sequins, are still wedded to a broken fashion from the 80s.

The perpetuation of outsourcing has resulted in an erosion of worker rights. Not only are outsourced workers more likely to suffer from bullying and discrimination, but also from far worse terms and conditions than their directly-employed colleagues. In the UK, outsourced cleaners, security officers, receptionists, and caterers rarely earn above the London Living Wage of £10.20 an hour, with many on the minimum wage of £7.83. Sick pay is virtually non-existent and employer pension contributions are the minimum required by law.

That’s why the Independent Workers Union of Great Britain (IWGB) a member-led  union that has been at the forefront of the fight for the rights of precarious workers, is leading a legal challenge that could turn outsourcing on its head.

The union is saying that it should be able to collectively bargain on behalf of 75 outsourced workers, not only with the facilities management company that hires them directly, but also with the University of London: the place where they actually work and which benefits from their labour.

The argument is that for workers’ trade union rights, enshrined in article 11 of the European Convention of Human Rights, to be respected, they have to be able to negotiate with the entity that has the ultimate decision-making power when it comes to their pay, terms and conditions.

This could open the door for all of the 3.3 million outsourced workers in the UK to negotiate their terms and conditions with their de-facto employer.  Some are arguing that this would put an end to the two-tier workforce created by outsourcing.

As leading barrister Jolyon Maugham QC says, companies outsource because “if those nameless faceless outsourcing companies treat their workers badly, it doesn’t rebound on the big consumer-facing company.”

The IWGB’s experience confirms that assessment. In 2017 it dealt with complaints from 54 outsourced workers at the University of London, over issues such as unlawful deduction of wages and discrimination. In the same period, the union dealt with only two complaints from direct employees.

In a recent example, the outsourcing company at the University of London, Cordant, now requires cleaners to show their travel tickets to their manager prior to booking a holiday. The university would never allow its direct employees to have their privacy invaded in this way, but it’s a different story when it comes to the predominantly migrant and BAME outsourced workers.

Despite the myth that the university is happy to perpetuate, the reality is that it has the power to dictate the terms under which the outsourcing companies hire their workers. Every single victory the outsourced workers have had, has been as a result of pressure they applied on the university, not the outsourcing company.

The prospect of radically changing this landscape might be why the IWGB’s case has shaken the establishment. A few weeks ago, the government decided to enter the case as an interested party opposing the union’s arguments. This means that the IWGB will not only be facing the Central Arbitration Committee (the tribunal that originally denied the claim), the University of London and outsourcing company Cordant in court, but also the Department for Business, Energy and Industrial Strategy.

The union has also been denied cost protection by the court, so if it loses, it will have to pay for the opposing side’s legal costs, which could stretch to the hundreds of thousands of pounds.

This could spell the end for the IWGB, a union that was founded only six years ago by a group of cleaners fighting outsourcing, but that has since taken on some of the biggest fights in the UK, from Uber’s sham contracts to mass victimisation of foster care workers.

The cards would seem to be stacked against the union, but as this case and others raise awareness around the myth of outsourcing, support for the fight has been pouring in. In three days a crowdfund appeal to cover the legal liabilities has raised over £2,000 and the legal campaigning group the Good Law Project has pledged a further £5,000.

It’s still far from the hundreds of thousands of pounds in legal liabilities that the IWGB could be lumbered with if it loses the case. But for a union famed for achieving what was previously considered impossible – from organising migrant workers, to unionising so-called “gig” workers – walking away from the fight is not an option it’s willing to consider.

You can support the case by donating to the crowdfund here.

Emiliano Mellino is an organiser and press officer at the IWGB

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