Council-owned company employees paid less than town hall staff, says UNISON

Staff employed by council-owned trading companies are paid less and receive inferior pensions compared with town hall staff, according to UNISON.

Research by the union revealed that more than three-fifths (62%) of councils now own at least one local authority trading company (LATC).

These are firms delivering local services or generating income.

The ‘Trading Places’ study revealed that councils have established more than 850 companies, many of which provide housing, social care, and waste services, alongside investment projects like commercial property rentals.

Around 5% of the local Government workforce is now employed by council-owned trading companies.

UNISON warned, however, that staff transferred or recruited directly by these firms are not guaranteed pay deals in line with nationally negotiated agreements.

More than half of large local authority trading companies that responded to freedom of information requests did not follow standard council pay scales.

For example, in 2024, Independence Matters – owned by Norfolk County Council – did not pass on the full local Government pay rise, leaving staff around £500 short, according to the union.

Research also showed that these firms often offered poorer pension packages than the standard Local Government Pension Scheme (LGPS).

Fewer than half (48%) of the large firms that responded to UNISON’s survey said they provided full access to the LGPS for all staff.

Mike Short, head of local government at UNISON said: “During the austerity era, it was no surprise to see councils establishing trading companies to provide vital local services or generate income.

“But with central government now placing greater emphasis on social value in procurement and making work pay, councils shouldn’t be using trading companies to slash staffing costs.

“The government should review the scale and usage of local authority trading companies so the benefits to councils are not at the expense of workers and their communities.”

Workplace Journal contacted Independence Matters and Norfolk Council prior to publication.