Removal of Consolidated Contracts at Fugro

[sean]

An email was sent out today from MD basically saying that consolidated contract employees will be offered non-consolidated/dayrate contracts, I’d cut and paste the letter but I’m in the middle of a main lift reterm

[grassyscones]

Fugro-Rovtech Ltd, like all other companies within the offshore Oil & Gas Industry, and throughout the UK in general, faces increasing challenges as a result of the recent recession. This has regrettably had a direct impact on the availability of work for our offshore staff, as recently evidenced by the increasing amounts of time field-staff are being forced to spend at home.

During this difficult period the Company has to continue to remain competitive and profitable for our shareholders and as importantly, our most valuable asset, our staff. In order to achieve this and reflect the changes in the current market place the company has had to consider a number of initiatives.

To remain competitive the Company regularly reviews its business strategy and practices, and at the beginning of 2009 had already taken the decision to discontinue offering the offshore consolidated contract. This decision was taken due to the financial burden to the company of staff not reaching their contractual days. We currently employ over 170 offshore staff on consolidated contracts, many of whom during 2008 and 2009 were increasingly unable to reach their contractual days. The cost to the Company of this was considerable, generating a financial impact which the company cannot sustain in the current economic climate.

In the face of this situation our primary aim is to avoid a compulsory redundancy programme.

Therefore, in order to provide sustainable employment, avoid job losses and to ensure the Company’s financial stability going forward, we intend to enter into a collective consultation process with offshore staff on consolidated contracts to offer either a change to a ‘day rate’ or non-consolidated (pay as you go) contract.

As part of the consultation process we will consult with elected employee representatives from the offshore ‘consolidated’ pool of staff. We will be writing to you shortly to explain the process in more detail and to explain the role and responsibilities of the employee representative.

Also, we must advise that in line with all Fugro-Rovtech Ltd staff, we have taken the decision not to proceed with the annual pay review for both onshore and offshore staff.

We hope you understand the need for these actions, and we give you our total commitment that we will work together to achieve positive future developments for both the Company and its staff.

In the meantime if you have any immediate queries or concerns please contact your mentor.

Yours sincerely,

For Fugro-Rovtech Limited

[Anonymous]

Its cheaper than redundancy and without the legal rules that are involved. Simply offer staff alternative employment/contracts (day rate) and leave the folks you dont want at home….unpaid.

It just goes to show that being staff these days doesn’t mean much.

[Al Phelps]

Also because they will consult with "employee representitives" as long as they agree they can change your contract without you being able to stop it.

[Ray Shields]

Also because they will consult with "employee representitives" as long as they agree they can change your contract without you being able to stop it.

I believe you are incorrect, each individual staff member will still have to agree to change their contract.

The consolidated contract pays people the equivalent to working offshore for a fixed number of days a year, i.e. you get paid for them whether you work them or not. If 2 people on the different contracts both work for example 160 days, they will both earn the same. If they both work only 100 days then the consolidated gets more.

I believe they are being honest in saying that with the amount of staff they have and less work, they have to do something to reduce fixed costs. Its either that or there may be redundancies.

Having gone through redundancies at Fugro in the past, I also do not believe they are doing this because it is cheaper than going through redundancy. A weeks pay for each year worked with the company is the redundancy payment, hardly a great amount to pay out for most as this is based on salary ONLY and not what you earn with offshore allowance.

[Scott Beveridge]

One other question that can be brought up is: there are 170 offshore personnel within Fugro ltd…… How many people are there in the office???? 75, 80, 90??????? Someone have a number (actual number)????

[Anonymous]

I believe you are incorrect, each individual staff member will still have to agree to change their contract.

I dont think thats the case, as anyone who has had even minor changes made to their contract will know. Unless stated otherwise the company simply has to offer alternative employment or contract to any staff member to satisfy the law. They are pretty free to make what ever changes they like. Those that "refuse" to accept the new contracts will soon find that out. Why would anyone give up a consolidated contract unless you have no choice?

A week for every year as redundancy is generous compaired with many. As the legal minimum would far less than that. The alternatives for the consolidated salary could be a reduction in days, reduction in salary. A restructure of the salary deal. A salary plus offshore allowance for example. The solution of everyone on day rate is extreme.

[Ray Shields]

I believe you are incorrect, each individual staff member will still have to agree to change their contract.

I dont think thats the case, as anyone who has had even minor changes made to their contract will know. Unless stated otherwise the company simply has to offer alternative employment or contract to any staff member to satisfy the law. They are pretty free to make what ever changes they like. Those that "refuse" to accept the new contracts will soon find that out. Why would anyone give up a consolidated contract unless you have no choice?

A week for every year as redundancy is generous compared with many. As the legal minimum would far less than that. The alternatives for the consolidated salary could be a reduction in days, reduction in salary. A restructure of the salary deal. A salary plus offshore allowance for example. The solution of everyone on day rate is extreme.

The redundancy payment due to each employee under the statutory redundancy payment scheme depends on his or her age and length of service (up to twenty years). This determines the number of weeks pay due, which is then subject to a limit on weekly pay.

To calculate the number of weeks pay due, you should use the following amounts –

0.5 week’s pay for each full year of service where age during year less than 22
1.0 week’s pay for each full year of service where age during year is 22 or above, but less than 41
1.5 weeks’ pay for each full year of service where age during year is 41+

http://www.berr.gov.uk/whatwedo/employment/employment-legislation/employment-guidance/page33157.html

To explain the 2 different contracts to those who are unfamiliar
unconsolidated means you get paid salary plus an allowance for any onshore/offshore day.

A consolidated contract gets paid a salary plus 12 offshore and 1 onshore allowance every month. So until you have worked 156 days, this is all you will receive every month. Once you do over 156 days you will then also be paid the additional allowance after that.

So basicaly Consolidated get paid for 156 days offshore whether they work them or not. As long as people do more than 156 days you both earn the same pay. The problem is that work is not as plentiful and many are now being paid offshore days without the work being there.

This is not a minor change of contract, and hence they Do require each employee affected to agree to it. Employee reps are only being used to consult and discuss the proposal with the staff affected. There is no collective bargaining agreement therefore the reps are NOT able to agree the change on behalf of employees. Ref http://www.worksmart.org.uk/rights/can_my_employer_change_my_contract_of

The Company has to do something to save money, they have many staff sitting at home being paid for days that they do not have work for. I truly believe they do not want to make people redundant having taken so many on over the last few years and spent time and money training them.

Why would employees choose to do this? Because otherwise they may be made redundant.

[Ray Shields]

One other question that can be brought up is: there are 170 offshore personnel within Fugro ltd…… How many people are there in the office???? 75, 80, 90??????? Someone have a number (actual number)????

Scott,

no, there are over 170 of the offshore staff on the consolidated contract. I believe that is out of about 250. Note that this is Fugro Rovtech, not any other Fugro company.

I guess you are about to say "get rid of some of the office staff"! The whole point of this proposal is so that no-one has to lose their job. The 170 that get guaranteed 156 offshore days are much better off when there is little work but no better off when there is work.

Those on the standard contract lose out when there is no work and are no better off when there is work.

Or is it the case of "Im allright Jack" from those on consolidated? They may keep their jobs while their mates lose theirs. Or they may lose theirs?

[Scott Beveridge]

Fair enough Ray… Those losing out can join the likes of us mercenaries (sans back knives please!). To those of you in this position (especially you lads / lasses in the N. Sea) – "WHY DON’T YOU ALL BAND TOGETHER?"……….. One of my favourite biscuits……. And form YOUR OWN Yuni0n????

[Bacaruda]

Perfect time to get rid of dead wood !

[Anonymous]

Rayshields wrote:

The redundancy payment due to each employee under the statutory redundancy payment scheme depends on his or her age and length of service (up to twenty years). This determines the number of weeks pay due, which is then subject to a limit on weekly pay.

Followed by a nice table of years against days, and so on. However:

That weekly pay limit is given on the very next paragraph, did you forget to add this? Thats £350 a week, as the maximum. To give the impression that folks would get "a weeks wage" for every year is misleading…unless the Fugro lads are on £350 a week that is. However I suspect deep within the Fugro paperwork there is a discretionary payment process also. Fugro will probably have a redundancy policy document and it would be mentioned there. Subsea 7 has such a clause for example, but seldom used these days.!

Rayshields wrote:

This is not a minor change of contract, and hence they Do require each employee affected to agree to it. Employee reps are only being used to consult and discuss the proposal with the staff affected

Agree or loose your job isn’t exactly much of an "agreement" in my books. Clearly they have more staff than required for the work looking forward. Some folks will be left at home, no question. An all out movement to day rate is extreme, or its a dire outlook for Fugro

[HelpMaBoab]

Looking at the bigger picture, along with the SS7 and Acergy rumours, there could be an influx of personnel into the agency ranks.
Too many Pilots chasing too few jobs.
Not to good a scenario, I can see agency personnel only being paid when they step on to the installation after paying their own way to get there in the first place.
Supply and demand, unfortunatly the supply of personel is outstripping demand, and it looks as though this will be the case for most of this season. 😥

[Ray Shields]

Followed by a nice table of years against days, and so on. However:

That weekly pay limit is given on the very next paragraph, did you forget to add this? Thats £350 a week, as the maximum. To give the impression that folks would get "a weeks wage" for every year is misleading…unless the Fugro lads are on £350 a week that is. However I suspect deep within the Fugro paperwork there is a discretionary payment process also. Fugro will probably have a redundancy policy document and it would be mentioned there. Subsea 7 has such a clause for example, but seldom used these days.!

Agree or loose your job isn’t exactly much of an "agreement" in my books. Clearly they have more staff than required for the work looking forward. Some folks will be left at home, no question. An all out movement to day rate is extreme, or its a dire outlook for Fugro

As far as I am aware there is no redundancy policy at Fugro, if they did then we would have been given a copy of it previously. During previous redundancies, Fugro agreed to pay as per the calculation shown, ignoring the limit of £350, I do not see them doing any different this time.

It isn’t a free of lose your job, its agree or RISK losing your job in a redundancy raffle. It is not an all out movement to dayrate, they have offered dayrate as an option.

Basically the choice is remove the guarantee of 156 days, switch to dayrate again with no guarantee or risk a round of redundancies across the board of all offshore staff. They cannot just choose the redundancies among those on consolidated.

What would others do if you were in Fugros position with lots of staff getting guaranteed days pay with not enough work for them all? This is the dillema they have, it cannot continue but they don’t want to make people redundant. What are the other options?

As Boab said, it would be bad news for the Agency people as it would release a whole bunch of new people chasing (desperate!) for work willing to work at low wages.

[Anonymous]

Its a mismanagement of personnel. If they can not give those on a consolidated salary who should be quality, core staff. At least 156 days a year, then there has been a gross error in workforce priorities. In the days of companies being run by accountants. These core staff should have been given priority over any other personel and I am surprised this has happened in both 2008 and 2009 and into 2010

If they can not provide 156 days when the pressure is on them (staff already paid this amount) then what hope is there when the financial pressure is off?
Ray wrote:

It isn’t a free of lose your job, its agree or RISK losing your job in a redundancy raffle. It is not an all out movement to dayrate, they have offered dayrate as an option.

what isn’t clear from the Fugro letter is whether there is an actual option for the employee’s. It states:

we intend to enter into a collective consultation process with offshore staff on consolidated contracts to offer either a change to a ‘day rate’ or non-consolidated (pay as you go) contract.

It could be the case they offer folks the option. However it could be the case that THEY offer one of the two options to those on consolidated contracts. The bottom line is they have too many staff. Some folk need to leave or the pie needs to be divided more. Its that simple

Redundancies are not great but neither is the option of giving everyone remaining only 100 days. Those that take a new salary position might be contractually tied to Fugro with a relatively small salary, but unable to work for anyone else.

[Author]

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