Outsourcing Toolkit

Legal action threatens Shell's outsourcing plans

Tags:
Workers,
Signed,
Staff,
Contracts

Nick Heath silicon.com

Published: 08 Jan 2008 08:53 GMT

Shell is facing the threat of legal action from trade union Amicus over staff redundancy terms, which could hit the oil giant's plans to outsource up to 3,200 tech jobs.

The oil multinational is in the process of finalising contracts with AT&T, EDS and T-Systems to run the bulk of its global IT infrastructure as part of a cost-cutting drive.

But the outsourcing plans may be affected by wider legal action being threatened by Amicus to force Shell to reinstate a company redundancy package worth up to £200,000.

Amicus said Shell replaced the £200,000 pay-off provision in June last year with an agreement whereby employees who are made redundant will now only receive a package worth up to £50,000.

Regional Amicus officer Graham Tran told ZDNet.co.uk's sister site, silicon.com, that there is widespread unhappiness among Shell staff and a feeling that "loyal" employees are being "dumped".

He said: "We just want Shell to look after its loyal employees. It no longer has a commitment to the workforce."

Amicus is hoping legal action will force Shell to reinstate the more favourable HR policy before the IT outsourcing contracts are signed.

As well as securing better payouts for any immediate lay-offs, this would mean those IT workers who are transferred from Shell to the outsourcing companies will be guaranteed the higher pay-out should their new employers decide to make them redundant further down the line.

Read this

Special report: Countering corporate espionage

How can you mitigate the risks to your company?

Tran said: "If we are successful [in getting Shell to honour the original HR policy] the new employer will pick up responsibility for that."

That could potentially cost AT&T, EDS and T-Systems millions when they take on Shell IT staff as part of the outsourcing contracts to run the oil company's IT infrastructure.

Shell is apparently arguing the previous redundancy package with the larger payout terms only applied to offshore oil rig staff and not IT workers, something Amicus is disputing.

Tran said: "Shell is arguing that it did not apply to the IT people. [But] it was negotiated by the staff rights committee and both offshore and onshore workers had representatives on that committee."

Shell declined to comment on its HR policies and redundancy terms.

Tran said the bulk of the IT employees affected were in the UK, with many at Shell's HQ in Aberdeen, and the rest based in Europe.

He said: "The majority of staff will be transferred but I would not rule out redundancies in future. The feeling is that these people are being dumped by Shell after years of loyal service."

Contracts for the IT outsourcing are expected to be signed in March, with EDS taking over end-user computing services, T-Systems hosting and storage services and AT&T managed network services.

Shell has been quoted as saying it plans to make pre-tax cost savings of about $500m (£250m) per year through streamlining its structure and cutting and outsourcing jobs. Shell employs about 108,000 people worldwide.

Credit: Shell's outsourcing plans face legal threat from silicon.com