The Press and Journal (Aberdeen and Aberdeenshire)
Oilfield service firms are in a ‘desperate situation’
Virus: Quandary as even furloughed staff costing hundreds of thousands
Many North Sea oilfield service firms are being left in a “desperate situation” over whether to axe staff or pay mounting maintenance costs to keep them on furlough.
It is understood firms such as Bilfinger, Wood and Aker Solutions are facing a financial “conundrum” as they continue to haemorrhage hundreds of thousands of pounds in worker expenses with no guarantee of future work coming in.
Union bosses say the Covid-19 furlough scheme does not account for several incurred employment costs, which they believe equates to about 8.5% of each individual worker’s annual salary. They say the situation has left firms with high employee quotas paying out around £250,000 a month to furlough staff, with others paying close to half a million each month.
Fiona Herrell, an employment partner for Brodies law firm, said: “Employers who normally make pension contributions above the statutory minimum level will be funding the amounts that are not recoverable under the scheme themselves.
“They will also be incurring costs in respect of the benefit schemes they have contractually agreed to make available to their employees. Even if an employer has decided not to top up their employees’ pay while furloughed, annual leave taken during the furlough period must be paid at 100% of normal holiday pay and the additional amounts will not be reimbursed by HMRC.”
The issue has been blamed for a number of recent redundancy announcements by Bilfinger Salamis, Bilfinger UK and Wood.
Jake Molloy, regional organiser for RMT Union, said: “As far as operators are concerned, if they’re not being provided a service and the staff are not on their installations, then they are not going to pay.
“This is the desperate situation a lot of the contractors are in and it’s bleeding money out – we’re in a situation now where a decision has to be taken.”
Mr Molloy claims workers have already begun to drift away from the sector, which will “only get worse as other sectors begin to ramp up”.
Oil and Gas UK workforce engagement manager Alix Thom said: “Flexibility will be key in ensuring this industry has a range of tools to support the different needs of companies. However, as our most recent report shows we do expect significant job losses. This is why we are focused on recovery and identifying opportunities to stimulate activity in the basin and improve competitiveness.”