An umbrella company has been prosecuted after it unlawfully deducted wages from a UCATT union member.

An employment tribunal judge found Paystream My Max were not "open and transparent" in its agreement with the employee.

The North West member was awarded just under £4,000 as the judge ruled the employee had not agreed to deductions to be made for the employer's national insurance contributions, the employer's pension contributions, a margin payment (the umbrella company's charge) and that holiday pay was rolled up into the rate.

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Brian Rye, Acting General Secretary of UCATT, said: "This was a highly significant victory as it demonstrated that there is an opportunity to challenge the fairness of the practices of umbrella companies in tribunals.

"Whenever UCATT has the clear opportunity to legally challenge the legality of umbrella companies we will not hesitate in doing so.

"Although this was a significant victory, this case is far from a magic bullet in the fight against umbrella companies. There is a multi-million pound industry which seeks to legitimise umbrella companies and false self-employment in construction. The problem of umbrella companies will continue until they are outlawed from the industry."

(LM/MH)