Ucatt said more than 100,000 construction workers currently operate via payroll companies.

The payroll firms allow them to keep more take home pay than being put on PAYE.

But union leaders say the system means workers are denied employment rights like holiday pay, sick pay and redundancy pay.

George Guy, Acting General Secretary of Ucatt, said: “Payroll companies have absolutely nothing to do with construction.

“They put nothing into the industry yet they make a tidy living from those working within it. They are what you would call parasites.

“At a time when the Government is imposing massive cuts in public spending it seems inconceivable that the money being lost to the Treasury in this manner goes unchallenged.”

In passing the motion TUC Congress has committed the TUC General Council to “campaign actively for a change in the law to prevent payroll companies being able to classify workers as self-employed.”

Payroll bosses hit back at the unions and described their attack as “misdirected”.

David Jackson, managing director of Hudson Contract Services, told the Enquirer: “Were Ucatt to present a proper case against rogue payroll companies, we at Hudson Contract would be only too pleased to stand alongside them.

“But the reported comments from Ucatt are both misdirected and partially false. The facts are as follows;

“Hudson Contract has never recruited or forced a single worker to sign one of our contracts. Not one out of 93,000.

“Those entering into a Hudson contract do so out of choice. Several union officials and three Ucatt regional secretaries have recognised that our document set even prompts consultation with union or legal advisors prior to signing.

“Uniquely to Hudson, the Courts and Tribunals have also recognised the validity of self-employment under Hudson Contract as ‘lawful, proper and ethical.’

“I can also state as a fact that Hudson Contract has never charged a fee from the operatives we pay.

“From establishing the company in 1996, Hudson has always charged a fee to the construction firms who become our clients.

“Whilst it is true to say that the comments expressed do apply in their entirety to other payroll firms, and in many respects we share the concerns expressed by Mr Guy, the union has mixed fact with supposition.

“But then again, this union also confused its own membership and the TUC with its membership number and its electoral procedures, so the misdirection of the comments does not come as a surprise to me.”