A union boss has claimed a “host” of North Sea contracting firms are poised to lay off furloughed workers as the cost of maintaining the scheme mounts.
Jake Molloy, chairman of the Offshore Co-ordinating Group, said unions were in consultation with “at least four” employers planning to serve notice of redundancy before the UK Government’s job retention scheme ends.
Mr Molloy said sustaining the employment of nearly 2,000 furloughed workers had cost a group of eight employers a total of £5.5 million over the past nine weeks.
One worker at energy services firm Stork said he was “terrified” of the prospect of losing his job once his consultation process concludes at the end of May.
The employee did not understand why he was being removed from the furlough scheme, given the government recently agreed to extend it by four months.
The initiative, which covers 80% of furloughed workers’ wages up to £2,500 a month, was initially expected to run until the end of July.
North-east oil industry chiefs generally welcomed the extension to the end of October, but Mr Molloy warned at the time that prolonging the scheme may exacerbate redundancies.
The furlough programme does not cover incurred employment costs – such as pension contributions, perks and annual leave payments – which, according to union chiefs, equate to about 8.5% of an individual worker’s annual salary.
In a letter seen by Energy Voice, Stork told the “at risk” worker it now had “significantly lower levels of confirmed assignments” and expected that trend to continue “throughout the year”.
The company said it had looked into redeployment options, but warned the consultation “may” result in “termination of employment”.
Stork did not respond to a request for comment.
But Mr Molloy said employers whose income had been wiped out by the Covid-19 pandemic and a sharp drop in oil prices were arguing that furlough “cannot be sustained”.The offshore union boss added: “The trade unions would much prefer that workers are retained on the furlough scheme and we will continue to press that objective.
“We will also seek legal advice and guidance on the position of whether termination and redundancy is lawful in terms of the furlough provisions.
“We do absolutely sympathise with the contractors and accept that we must find a way to avoid any company going into administration as a consequence of those costs.
“But, equally, we want to protect our respective members’ employment and income.”