'Unpaid sabbaticals' to wage cuts: How oilpatch companies are avoiding layoffs

CALGARY -- Companies in the ailing oilpatch are looking at ways to avoid layoffs -- or at the very least to delay or minimize them.

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Canadian Natural Resources Ltd. (TSX:CNQ) has not had to trim its workforce of more than 7,600 as a result of the crude price collapse.

"In lieu of layoffs, we went to our staff and said 'we will do wage reductions.' And every employee who made more than $50,000 had a wage reduction," chairman Murray Edwards said to applause at a recent business forum in Lake Louise, Alta.

"The majority of employees said they would rather ... keep the team together than to have people laid off."

The Canadian Association of Petroleum Producers has estimated at least 40,000 jobs have been shed in Canada's oil and gas industry this year, with the bulk in Alberta.

With oil prices hovering below US$50 a barrel for much of this year -- and dropping below US$40 in recent days -- it's been tough for oil producers to justify investing in new projects.

About 1,500 job losses have been announced at oilsands giant Cenovus Energy (TSX:CVE) this year. But in addition to that, the company has taken a hard look at benefits and discretionary spending, said CEO Brian Ferguson.

"We did put in a salary freeze in 2015 as did, I think, most of industry. We have reassessed all of our time off practices."

Debby Carreau, CEO of human resources consulting firm Inspired HR, encourages employers to look at all options before they resort to letting staff go.

That could include reducing or delaying contributions to Registered Retirement Savings Plans, suspending health spending accounts, freezing salaries or slashing bonuses.

Some companies that have cut salaries are rewarding employees with stock. Others have instituted shortened work weeks or given employees "unpaid sabbaticals" until things look up.

And some have encouraged employees to go back to school or brush up on their training, with a promise that they'll have a job to return to.

Instead of catered lunches in the office every day, maybe it's sandwiches from Subway once every two weeks now, said Carreau.

"Those peripheral fringe benefits can actually add up, especially in Calgary where we've had such lucrative compensation plans," she said.

"Some of those things that people don't automatically look at can actually save on costs and send the right message to the organization -- that you care, but you're doing everything you can to keep the jobs."

Integra Partners Ltd., a company with fewer than 30 employees that helps oil and gas companies manage their documents, has done everything possible to avoid layoffs, said partner Chris Blender.

Blender and the firm's other partners have taken a pay cut. Integra also found a new benefits provider that offers the same services as the old one, but at a lower cost.

"Because we're in the service industry, people are our business and we spend a lot of time to attract and train our people," he said. "The last thing we want to do is let anybody go during this time."



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