Workforce Report 2018

WORKFORCE REPORT 2018

5.3 Brexit Brexit, and any changes to immigration policy associated with it, could have an impact on the workforce. Seven per cent of the UK’s offshore population are from other EU countries and a further 7 per cent from non-EU countries, reflecting the global nature of the industry and the global reach of many of our members. It is important for the UK that any negative impact on this part of the workforce is minimised. Many companies in the industry need to maintain the mobility of their workforce to enable them to capitalise on new business and personal development opportunities for staff overseas. Although it is a common requirement for companies operating overseas to maximise the proportion of local personnel in their workforce, those workers often carry out their training in the UK. Conversely, in many cases, homegrown talent is sent overseas to open up new provinces and/or train local workforces. During periods of high industry activity, skills shortages were reported by members of Oil & Gas UK as being the second biggest threat to their business. Members are beginning to express similar concerns again, not because of a failure to train but because many people who have left the industry in the downturn will not return. 5.4 Tax and the Self-Employed The oil and gas industry also needs to consider how to manage more proactively a workforce that has traditionally relied heavily on personal service companies (also referred to as day rate contractors) without day rates rising sharply again through periods of high demand and activity. The independent rate survey work carried out by Mercer provides reliable market data, and Oil & Gas UK, through its Employment and Skills Forum, will facilitate the development of guidance regarding forthcoming legal changes. Though typically self-employed contractors in oil and gas generally work in highly skilled, white collar positions, there are potential impacts from case law relating to atypical workers in the private sector, such as the well- documented Uber and Pimlico Plumbers cases 17 , the Taylor Review of modern employment practices 18 , and the likely extension of revised IR35 legislation that relates to tax treatment of self-employed people. Most of these contractors (also known as limited companies or one-man bands) provide services through their own personal service company. The key issue here is employment status, which remains a somewhat grey area outside of conventional employment.

Changes to the tax legislation, known as IR35 or off-payroll working, are so far only applicable to the public sector. However, the government is currently consulting on the possible extension to the private sector.

These changes – if applied to the private sector –mean that the end user of the personal service company’s services will become responsible for determining whether an individual is truly self-employed or falls within the scope of IR35, in which case the tax and national insurance must be deducted as if the individual is an employee. This could raise the prospect of the contractor claiming to be a ‘worker’ under employment legislation (as in the cases cited above) and therefore claiming entitlement to certain employee benefits such as holiday and sick pay and the national minimum wage. Clearly this presents an additional administrative burden at best for end user companies,

17 Y Islam, J Farrar and others v(1) Uber B.V. (2) Uber London Ltd (3) Uber Britannia Ltd is available at www.judiciary.gov.uk/judgments/mr-y-aslam-mr-j-farrar-and-others-v-uber/ Pimlico Plumbers Ltd and another (Appellants) v Smith (Respondent) www.supremecourt.uk/cases/uksc-2017-0053.html 18 Good Work – The Taylor Review of Modern Working Practices July 2017 is available at www.gov.uk/government/publications/good-work-the-taylor-review-of-modern-working-practices

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