House of Lords - European Union

Select Committee on European Union Written Evidence

Memorandum by Offshore Industry Liaison Committee (OILC)

1. OILC is a certificated trade union having in membership 2,000 workers employed in the offshore oil and gas industry. The purpose of this submission to the Select Committee on the European Union is to highlight the refusal of the offshore employers to implement properly the Working Time Regulations S.I. 1998/1833 as amended. The employers' failure to act is to be challenged through the tribunals and courts in proceedings that are likely to be protracted and costly.

2. We also wish to bring to the attention of the Committee the inadequacies of the 2003 Working Time (Amending) Regulations which transpose into UK law the Horizontal Amending Directive in relation to the formerly Excluded Sectors and the detrimental effect that those inadequacies are having on the rights and protections offered to offshore workers.

3. The offshore oil and gas industry was, until 1 August 2003, one of the Excluded Sectors along with doctors in training. The Amended Regulations incorporate into UK law the "other work at sea" aspects of the Horizontal Amending Directive. In this legislative process many of the protections fundamental to the Working Time Directive were neutered or removed entirely in regard to the offshore oil and gas industry. For example, regulation 21 modifies or removes the following protections and entitlements from offshore workers:

6(1), (2) and (7):

10(1):

11(1) and (2):

12(1):

One is tempted to wonder what was the point of regulating at all! The UK Government was compelled to legislate both by the Horizontal Amending Directive and the 1996 European Court of Justice judgement. But the Government in doing so has moved only far enough to get the European Commission and the European Court of Justice off its back. The Amended Regulations, as currently framed are not likely to have any impact at all which, we are convinced, is precisely the outcome the Government intended.

4. Nevertheless, three working time protections have (at least in theory) been extended offshore by the 2003 Amending Regulations. These are the 48-hour average weekly limit on hours of work (except where the worker personally opts out), the entitlement to four weeks statutory holidays, and the entitlement to alternative compensatory rest for rest that could not be taken during the course of the offshore shift. Dealing with this last point first, the majority of offshore workers spend 14 nights offshore, 12 hours on, 12 hours off, followed by two weeks of field break onshore (15 days are work days, 13 are field break days). Put another way, 26 weeks per year is spent offshore, 26 weeks onshore. The entitlements to daily rest periods, weekly days of rest and shift-work restrictions on hours of work etc, lost through the regulation 21 provisions, are compensated for by alternative periods of rest in the days of the field break. Offshore workers do accept from an operational standpoint, that a literal application offshore of the Working Time Directive would be wholly impractical. Continuous 24-hour working, in two 12-hour back-to-back shifts, is essential. So it makes sense to defer the rest breaks and days. However, a source of increasing anger is the offshore employers' intention to nominate four of the 26 field break weeks as holiday weeks for the purposes of demonstrating compliance with the statutory provisions for four weeks annual holiday. This ploy, were it to succeed, would be the equivalent of onshore employers reallocating Saturdays and Sundays as the only days on which staff are permitted to take their annual holidays.

5. A short description of the offshore employment regime may be useful to the Committee in putting into context the issues explored in this Submission. Approximately 18,000 thousand men and women are currently employed offshore on 150 oil and gas installations, mostly in the North Sea but increasingly in the Atlantic as the oilfields West of Shetland are opened up. Drilling contractors, the owners and operators of MODUs (Mobile Offshore Drilling Units), directly employ the drilling crews thereon. Some thirty MODUs are drilling wells in the UK sector at present. Fixed production platforms, owned and operated by oil companies, are staffed for the most part by contractors. Many contractors are vendors providing specialist services. However, the bulk of contracting companies act as "proxies" for the operators employing approximately 90 per cent of the total staff on offshore productions platforms. The operators have used the "core-periphery" model of manpower utilisation since the early 1970s. Management and some production functions are retained in-house with all other work farmed out to the contractors. Advantages are a flexible pool of labour with easy disposability.

6. In the protracted debate, commencing 1992, on whether or not the Working Time Directive should be extended offshore the oil company operators have often characterised this contractor workforce as transient or seasonal. In reality, only a very small proportion could be so classified, 10 to 15 per cent and, even then, only during the summer shut down season. The bulk of platform and MODU crews are steady state and have been in employment for many years. For instance, 90 production platforms are in excess of 10 years old and 12 platforms, consisting Brents, Forties and Ninian fields (Britain's three biggest oilfields), have been in production for a quarter of a century. Throughout, each has been crewed mainly by contractors. We feel it important to qualify this because so often we hear the oil company mantra of "seasonal" or "just passing through" workers intended to impress on the legislators and others not familiar with offshore life that here is a largely peripatetic workforce not having need for working time legislation. The fact is that most contract personnel have been working out there for many years and deserve rights and protections no less favourable than those conferred on workers in other industrial sectors.

7. Hours of work. Approximately 10 per cent of the total offshore workforce is employed directly by the operating oil companies. Their annual hours of work are in the range of 1,800-1,900 hours [see table 2]. This approximates to the national average across other industrial sectors. The work/leave cycle of the directly employed staff is two weeks on three weeks off or some alternative equivalent rota. The point to note here is this: an onshore worker on the clock for 40-hours per week, and taking four weeks vacation and eight days of bank and statutory holidays per year, clocks up 1,856 hours per annum. Contrast this with the offshore contractor employee working an "equal time" rota of 26 weeks on, 26 weeks off in continuous 12-hour shifts who clocks up 2,184 hours per annum. This figure is, of course, the basic hours spent on shift and ignore all the other hours spent on the installation. So, in a nutshell, 90 per cent of the offshore workforce works at least 300 hours more per annum than any other worker in any other industrial sector in UK industry (see table 2). Worth reiterating the point that the 26 weeks of field break are not holidays, just the weeks that workers are not on the installation.

8. Spreadsheet One usefully illustrates the basic components of an offshore "equal time" work/leave cycle. Basic hours for each shift worked are shown including the part-shifts on days one and 15 of the work cycle. Not included are helicopter flying, overtime, shift-handovers, holdovers and training. Average weekly hours worked is calculated using the standard formula in regulation 6(4) where—

A: is the hours worked in the reference period (52 weeks);

B: the hours worked in the working days immediately following the reference period equivalent to the number of excluded days within the reference period; and,

C: the number of days of which the reference period consists.

A+B

=average weekly hours worked.

Theoretically an offshore worker averages 46.25 hours per week over the 52 weeks reference period.

9. Spreadsheet Two replicates the timesheet of a deck crew operative presently serving on a Shell production platform and records more realistically all hours worked and includes, as per Regulation 6(4), the hours worked in the number of days following the 52-week reference period equivalent to the excluded days within the reference period. Excluded days consist of the four weeks of statutory holidays, all non-working days, weekly rest days, sickness absence, maternity/paternity leave etc. Average weekly hours worked within the 52-week reference period is therefore 54 hours—clearly a substantial breach of the 48-hour limit. In fact, the average weekly hours of most offshore contractor workers does fall within this 50 to 60 hours band. It is important at this point to note why. The most significant factor in boosting the weekly average hours worked in Spreadsheet Two is that four of the 26 field break weeks within the 52-week reference period have been allocated to the four week statutory holiday entitlement (as the offshore employers intend to do). The days, to which the holidays are allocated, become excluded days, requiring that the hours worked in an equivalent number of worked days beyond the reference period be added to the total of hours worked within the reference period in order to calculate the average hours worked (regulation 6(4)).

10. In this key respect, the offshore employers are hanged by their own petard. Their prime objective is to not concede time off for statutory holidays by obliging employees to accept the fiction that four of the field break weeks are holidays. But the unintended consequence of this is the introduction of significantly more hours into the calculation by which average weekly hours are determined. How to get rid of those inconvenient extra hours in the equivalent number of worked days beyond the reference period?

11. Dealing with this quandary, the offshore employers are now saying that certain aspects of offshore workers' activities should no longer count toward the calculation. For example, the Regulations and case law indicate that routine travel from home to work should not count for the purposes of calculating the weekly average worked. OILC has no problem with that. But the offshore employers have recently announced that helicopter flights over the North Sea to the offshore installations, and flights between installations, now fall within this category of routine commuting between work and home and should no longer be classified as an activity—a notion so completely preposterous that it is greeted with ribaldry offshore.

12. Another whiz to try and reduce the hours tally further is to say that the working day offshore is 10.5 hours and not the 12 hours that the worker is required to be at the complete disposal of the employer. Apparently, a 1.5 hours deduction is for one hour of lunch and two 15-minute breaks. No doubt some offshore workers do enjoy an hour but it is certainly not universal. For example, the next drilling roustabout to get an hour for lunch will be the first one to do so in 30 years of offshore drilling. Offshore installations operate around the clock in two 12-hour shifts, 365 days of the year. In general terms the timing and duration of meal and other breaks during the shift vary from department to department with daily variations according to operational requirements with breaks staggered to allow for continuous process. It is easily demonstrated that offshore workers are absolutely captured for the full 12 hours of the working shift. The case law of SiMAP and Jaeger support unequivocally that all 12 hours should count to the total. OILC is confident that, in the forthcoming litigation, Tribunal will concur.

13. In fact, SiMAP, further refined by Jaeger, appears to confirm that the full 24 hours spent on the installation should count toward the total hours worked. Indeed, such has been the scale of "downsizing" over the past 10 years (the offshore workforce has shrunk from 35,000 in 1991-92 to less than 20,000 in 2003) many steady-state night shifts have been dispensed with. Consequently, many crew members are explicitly on call 24 hours per day to deal with supply ships, helicopters and unplanned operational events. Additionally, most installation crewmembers now have emergency response duties, the providing of which are indispensable for the legal and safe operation of the installation. As far as OILC is aware, no one has intimated an intention to pursue a Jaeger-type claim against the offshore operators. It is certainly arguable, in the opinion of our Counsel. One would think that the operating oil companies and their contractors, aware that litigation is coming their way consequent to their denial of the four-week holiday entitlement, would realise that, once the ball is rolling, someone, somewhere, is bound to consider the SiMap and Jaeger dimensions. Perhaps wise counsel might prevail conceding the holiday issue now rather than opening that particular Pandora's box.

14. Why are the trade unions not negotiating? They cannot. Not one single statutorily binding recognition agreement exists in the whole of the offshore oil and gas industry. Yes, some contracting employers do have voluntary "agreements" with certain unions, but nothing can be agreed without the explicit concurrence of the client oil companies, the underwriters, at the end of the day, of all labour costs. Woes betide the contractor stepping out of line. The "agreements" are worthless, the trade union officials responsible for them docile, and the legislation impotent. OILC is actively pursuing statutory recognition confident that it will one day surmount the not inconsiderable obstacles placed in its way. In the meantime, we respectfully request that the Committee give consideration to why the 2003 Amending Regulations are, to all intents and purposes, a dead letter of the law.

Table One

CONTRACTUAL AND STATUTORY HOLIDAY ENTITLEMENTS UK INDUSTRY


Industry Sector	Days

Agriculture & forestry	23.4
Mining & quarrying	26.5
Glass, ceramics & building materials	24.9
Oil, chemicals & pharmaceuticals	25.1
Engineering (including electronics)	25.2
Food, drink & tobacco	25.1
Textiles, clothing and footwear	24.5
Paper, print & packaging	25.5
Other manufacturing	23.8
Construction	22.5
Energy & water	25.8
Transport & postal services	23.8
Retail & distribution	22.8
Hotel & leisure	22.1
Finance	25
Broadcasting & other media	25
Telecommunications IT services	24.1
Public services	24.6
Voluntary sector	24.6
Overall average	24.5
Offshore contractors	ZERO

Source: Incomes Data Services Ltd.

Table Two

HOURS OF WORK IN UK INDUSTRY


Industry Sector	Hours

Agriculture & forestry	38.8
Mining & quarrying	38.7
Glass, ceramics & building materials	37.8
Oil, chemicals & pharmaceuticals	37.4
Engineering (including electronics)	37.5
Food, drink & tobacco	37.5
Textiles, clothing and footwear	38.5
Paper, print & packaging	37.7
Other manufacturing	37.8
Construction	38.2
Energy & water	37
Transport & postal services	37.1
Retail & distribution	37.8
Hotel & leisure	37.6
Finance	35.2
Broadcasting & other media	36.7
Telecommunications IT services	37.4
Public services	37
Voluntary sector	36.4
Overall average in onshore employment	37.2
Offshore average (nominal minimum)	42
Offshore average (actual minimum)	49.5+

23 February 2004