Officials in the north east plan the first protest today at Lend Lease’s £70m Northumbria Specialist Emergency Care Hospital job in Cramlington.

The union said it was targeting the site after being tipped off that workers employed through umbrella companies were being used for subcontract packages on the project.

The use of umbrella companies to pay construction workers has increased dramatically in recent weeks.

This follows a change in the law in April, when the Government introduced new measures requiring employment agencies and payroll companies to pay workers via PAYE.

The umbrella company model is an attempt to ensure that neither the contractor, the agency or payroll company is liable for increased cost.

Denis Doody, regional secretary for UCATT’s Northern Region, said: “This is an outrageous example of exploitation of construction workers on a publicly funded project.”

He said workers have to pay both the employee and employer National Insurance Contributions, amounting to over 25% of their gross eligible pay.

The workers are also receiving rolled up holiday pay, which means that their holiday pay is in their rate of pay and they are not paid when they take time off.

UCATT also said that in some cases workers on the hospital project were only paid the national minimum wage with the reminder of their pay being made up in expenses.

An HMRC spokesperson said: “Whether an umbrella company is compliant with the legislation will depend on the terms and conditions that it engages the worker under.

“HMRC will always look at the contractual terms in making an assessment of compliance.

“For expenses to be eligible to be paid tax free they must meet certain criteria, including being incurred by the worker and reimbursed by the employer.”