It is understood that AEEU boss and Tony Blair confidant Ken Jackson is to meet chancellor Gordon Brown to protest about the scheme, which is being used by up to 50 electricians on the £250m Portcullis House.
A number of electricians engaged by electrical contractor Kvaerner Rashleigh Weatherfoil are understood to be using the scheme, which legally enables them to avoid paying full income tax and National Insurance contributions.
The men are engaged through Essex-based subcontractor Diamond and employment agency Euro National. These use the services of two payroll firms, Gabem and Stirling. Under the scheme, Gabem and Stirling form limited companies that pay workers a weekly wage of about £100; the rest of their earnings come from a weekly “dividend” provided by the companies.
As a result, electricians using the scheme are thought to be earning up to £200 more than directly employed electricians on Portcullis House.
AEEU national officer Paul Corby said: “That this is going on in the construction of a government building is a disgrace. We intend to have talks with Kvaerner this week to give them an opportunity to change the situation. They must bring them into line or face the consequences.”
A spokesperson for Diamond confirmed that some of its workers on the site were engaged through the scheme, but insisted that it was in the process of transferring them to PAYE.
The spokesperson said: “The scheme is legal and they joined us under the scheme. If we insisted that the men went straight onto PAYE, they would leave.”
Simon Cowdrey, group operations manager for Euro National, confirmed that the company was supplying electricians who were using the scheme.
Cowdrey said: “The scheme is legal at the moment, and it is very difficult for a company like us to dictate to operatives how they should be employed. We do have operatives employed on PAYE, but most want to use this scheme.”
Kvaerner Rashleigh Weatherfoil confirmed it was to meet the AEEU to discuss issues surrounding a subcontractor but declined to comment further. A Revenue spokesman said the government intended to introduce legislation to outlaw the use of composite companies in this year’s budget.
