Some oil and gas contractors have lost more than half of their previous wage due to off-payroll working tax changes, according to a union boss.
New IR35 rules are due to come into force at the beginning of next month after the reforms were pushed back by a year due to the Covid-19 pandemic.
From April 6, oil and gas companies will be responsible for deciding whether a contractor is self-employed or not.
Many workers will become agency employees for North Sea firms rather than autonomous service providers, meaning they will have to pay more tax.
However, they won’t benefit from rights and protections afforded to regular employees.
Jake Molloy, regional organiser for the RMT union, described the situation as an “absolute outrage”, adding that most contractors have already implemented the new system.
He said: “Contractors are extremely dissatisfied with the situation and quite understandably so – what is happening to them is an abomination.
“These workers have lost, or will lose if they haven’t yet been moved, something in the region of 40% to 60% of their previous income. They also don’t have adequate rights or protections. I don’t think we’ve heard the last of this, that’s for sure.
“Given recent decisions I think there might be scope to challenge what’s going on. But, I’d much rather the industry would acknowledge these workers as employees rather than this unprotected, crazy hybrid.
“In the last year many of those affected by these changes have had no form of income because they’re not employees, limited companies or self-employed.”
Westminster introduced the new IR35 rules in order bring an end to individuals registering as companies and paying less tax.
The UK Treasury previously estimated the move would add an extra £2.9 billion to the government’s coffers by 2024.
An online poll carried out by accountancy firm Inniaccounts last year found more than a quarter of oil and gas contractors planned to jump ship as a result of the new rules.
Mr Molloy said that so far the majority of companies have judged workers to be inside IR35, meaning they are subject to PAYE.
He added: “Most operators would defend themselves by saying they’re erring on the side of caution so they don’t become liable.
“But, the fact of the matter is that workers are being removed from the liability of oil companies and put in this state of limbo, where an agency issues them a contract and tells them they’re going to be docked tax whether they like it or not. It’s madness.
“It’s nothing like what government intended and that needs to be rectified with haste, given the year these guys have just had.”
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