IF YOU READ NOTHING ELSE, READ THIS…
- Offshore workers are often employed by agencies, so do not necessarily receive the same traditional benefits as permanent workers.
- Offshore workers are often exempt from the Working Time Directive regulations and usually work a rota of 14-28 days on and 14-28 days off.
- The average salary for an offshore worker will increase by 15% this year from £64,000 to £73,600.
The average salary is expected to rise by 15% this year from £64,000 to £73,600, according to a survey published in March by online jobs board Oilandgaspeople.com, and the government has promised to plough millions of pounds into the industry over the next few years.
The UK oil and gas production industry currently employs about 400,000 people and the government estimates it will require 15,000 more over the next four to five years. In March 2013, business secretary Vince Cable announced plans to try to tackle the engineering skills gap by establishing a national programme, including £7 million for a new research facility at Newcastle University, to train and employ ex-military personnel as part of its Oil and Gas Industrial Strategy: Business and Government Action Plan.
Although the term offshore worker typically conjures up images of a man in overalls working on an oil rig or construction vessel in the North Sea, it actually covers a wide range of international roles, industries and locations. There is obviously a big difference between an expatriate who works in financial services in Singapore, for example, and a miner in Nigeria. But the biggest difference between an expat and the average offshore worker is the benefits they receive, says Sean Drury, international mobility partner at advisory firm PricewaterhouseCoopers (PwC).
“Expats usually have clearly defined benefits and a cost-of-living adjustment (COLA), while offshore workers have a per diem (daily) allowance and are often employed by managed service companies or agencies,” he says.
Per diem allowance
The per diem allowance typically covers standard expenses, including meals, travel and any additional costs incurred with the job, whereas COLA is usually an allowance given to employees to offset the cost of living in expensive areas, such as Tokyo or Hong Kong.
Offshore workers in the oil and gas sector are often exempt from the Working Time Directive regulations, which stipulate that EU workers have the right to a minimum number of paid breaks and rest during a 24-hour period. The rotational nature of their work, often 14 to 28 days on, then 14 to 28 days off, may mean they are rewarded financially but do not receive the more traditional perks of pension, private healthcare and financial education.
The question of whether offshore workers are entitled to be auto-enrolled into a pension was the subject of debate because of the transient nature of their work, location and employment. Seafarers and offshore workers were initially excluded from auto-enrolment because it was unclear whether they could be defined as UK workers, but the Department for Work and Pensions announced plans in February 2012 to extend auto-enrolment to seafarers and offshore workers.
Auto-enrolment
This means the 17,000 seafarers and 9,000 offshore workers who currently work in UK territorial seas, on the UK continental shelf or in the UK sector of a cross-boundary field, will be auto-enrolled unless they opt out.
National insurance contributions (NICs) and tax also came under scrutiny after the government announced plans to end the use of offshore employment companies in tax-free zones, such as Jersey and Guernsey, from April 2014. The rules concerning offshore workers and the agencies that employ them have always been ambiguous and complex, but HM Treasury is now looking at ways in which organisations employing offshore workers in the UK and the UK continental shelf will become liable for tax and NICs.
Despite the remote and often dangerous locations, the flexible schedule, pay and diverse nature of offshore work is a big draw for many people. Dr Alix Thom, employment and skills issues manager at trade body Oil and Gas UK, says: “Attractions for offshore staff include an attractive rota, well-rewarded employment, work in an interesting environment and the opportunity to live wherever they choose.”
Dangerous work
Mark Coleman, regional sales director Europe at Cigna Global Health Benefits, says the healthcare benefits offered to oil and gas workers differ from those available to the average employee due to the often dangerous nature of their work. Cigna’s Energy Plans, for example, include cover for emergency medical evacuation for staff in remote locations. “The plans have been developed to integrate with an [employer’s] own emergency evacuation facilities and procedures,” says Coleman.
The oil and gas sector is also starting to invest more in training and career development and building up a local workforce to improve retention rates. ExxonMobil, for example, has introduced a technical training course for its local staff in Angola and Angolans now make up at least 72% of its local workforce on the site.
So it seems that although offshore workers may not always receive the more traditional benefits offered to permanent staff, they still have plenty to write home about.
VIEWPOINT
: Linda Torr, senior consultant, global benefits practice, Aon Hewitt, and member, International Employee Benefits Association
With new maritime labour legislation coming into force from the International Labour Organisation in August 2013, the benefits provided to offshore workers are coming more into focus.
There are many considerations for an employer to ensure it complies with the new legislation, including the provision of benefits for health protection, medical care, welfare and social security protection. This includes the requirement for pre-deployment screening, access to primary care while on board, including dental care, and occupational health.
The employer is required to provide a minimum level of cover that is available on board, in port, if possible, and is no less favourable than the employee would have access to via their home country social security. The cost of benefit provision needs to take into account a number of facets: pre-deployment screening, primary care provision on ship or rig, evacuation and repatriation services to ensure an employee can receive appropriate care if taken seriously ill, access to medical services when on shore, access to social security provision, provision of disability benefits, death benefits and repatriation of mortal remains.
Some of these benefits may be provided via insurance policies and there are established marine, oil and gas medical policies in the market. Due to access to primary care and screening requirements, these policies are competitively priced when compared to the general expatriate medical insurance market. These policies may include ship-to-shore benefit, but the majority will only provide evacuation once the employee has been moved to an onshore medical facility.
With regard to disability and death benefits, the employer should ensure these policies can provide benefits to the employees, or their dependants, when in their home country and are compliant with any required legislation.
CASE STUDY: Pay and holidays are main attraction at Ceona
Ceona, which started life as the Offshore Installation Group in 2010 before being rebranded in 2011, is a new player in the oil and gas market. The London-based organisation, which now has 76 employees, has offshore sites in the North Sea, the Gulf of Mexico, the Norwegian continental shelf and West Africa.
Dave Mackay, offshore construction manager at Ceona, says remuneration and holidays, with employees receiving up to six months’ leave per year, are major attractions for recruits. “Generally, there are two main drivers for those who choose to work offshore as a career: money and holidays,” he says.
The chance to see the world and experience different cultures is seen as another big draw.
Working conditions have also improved in recent years and the health, wellbeing and safety of staff is now paramount. “Gone are the days when up to 16 men were crammed into one large cabin,” says Mackay. “As an employer, you must aim to maintain the standards your staff are used to in normal life.”
Ceona offers gym facilities, cinemas and internet cafés to all staff and runs regular site-specific safety training courses and risk assessments.
However, the benefits offered to offshore staff are still quite limited. “Most offshore workers are contract staff who don’t benefit as much from additional perks,” says Mackay. “Permanent staff are generally paid less pro rata, but get traditional benefits such as pensions and private medical insurance.”
In the longer term, training and career development are encouraged to aid staff retention. “We try to give people a clear career path and show them that our organisation is one in which they can progress and make the most of their ability,” says Mackay.