Precarious or insecure contracts for college staff have long been an issue of great concern to teaching unions, but now some believe there is a “shadow FE sector” emerging, with colleges setting up wholly-owned subsidiary companies to be able to employ teachers on inferior contracts.

According to the University and College Union (UCU), 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, says 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.

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 explains. Chris Jones, vice-president of UCU Wales, says: “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 shows 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. That is almost 5,000 fewer than the previous year, but the union says that a direct comparison is “difficult”, and the biggest obstacle to further progress is college leadership being “demonstrably unwilling to engage with UCU”.

The union now plans to expose colleges with “poor pay practices” by introducing a special “Disinvestors in People” badge to name and shame them on social media.

Sally Hunt, general secretary of the UCU, says: “Research has shown that poor working conditions for staff mean poor learning conditions for students. The easy hire-and-fire culture that comes with precarious contracts and farming out teaching to subsidiary companies is a false economy that weakens educational institutions.”

But David Hughes, chief executive of the Association of Colleges, says there are a number of reasons that colleges give for creating subsidiary companies. “A college may have seen benefit in delivering an educational programme by establishing a company with other partners in order to deliver an enriched and broader range of activity,” he says.

“In other cases a company may have been created to enable the college to distinguish between charitable educational activities and those on offer for commercial purposes. Colleges are significant employers, nationally and regionally, and take their responsibilities as ethical employers seriously.”

@willmartie