Royal Dutch Shell cuts IT contractor pay rates

Royal Dutch Shell has reduced pay for IT contractors, telling such temporary technology workers to lower their rates by 15% or face termination.

The Angel-Dutch oil giant told ContractorUK that current market volatility has made the need to reduce costs “across our business” more urgent.

But a Shell spokesman suggested that the company hasn’t just singled out IT contractors, as it is currently “pursuing a number of [other] initiatives to manage costs”.

He declined to be drawn on how Shell arrived at the figure of 15% as the cut IT contractors have been asked to make, even when reminded that BP has reduced rates by the same margin.

The cuts for IT contractors at both companies come after a prolonged fall in the oil price, which has more than halved since the summer of 2014.

In its latest financial report, Shell reflected: “Prolonged periods of low oil and gas prices… could result in projects being delayed or cancelled and/or in the impairment of some assets

“They may also impact our ability to maintain our long-term investment programme.”

The Shell spokesman said the thinking behind the rate reduction was to “improve the competitive performance of the business, in accordance with our global corporate strategy.”

The spokesman added: “This includes working with our contractors to identify opportunities to improve efficiency and performance.”

But one affected Shell contractor working at the company’s Projects & Technology unit doesn’t feel like he’s been treated like much of a partner.

“We have just 2 days to accept [the 15% rate cut] or our contract is up”, he said.

“Little does the CEO know that I [am going to] leave… [so] it should be interesting to see what happens.”

For those IT contractors thinking of fighting the rate reduction, a contracts lawyer cautioned that there was little chance that Shell has left itself exposed.

“It depends on the terms of the contract; but if Shell has a right to terminate the contract on ‘X’ days notice (or by immediate notice), then they also have the right to say the following:

 “‘you have ‘X’ days to consider whether or not to accept this change, and if you do not accept it then your contract will end,’” said Roger Sinclair, a legal consultant at egos.

The Shell spokesman said: “Shell seeks to maintain competitive rates for products and services, commensurate with relevant market developments.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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