The offshore drilling industry has been facing significant challenges for several years now due to reduced commodity prices and capital spending. The onset of COVID-19 across the world and the related and varying quarantine rules have added additional complexity for this global industry. Among other things, the well-honed logistics practices for changing crews have suddenly become more complex.
Quarantine rules, either in an employee’s home country and/or the work country, are constraining companies’ ability to change crews regularly, which typically happens based on a 28 day on/28 day off rotation. Hitches (or working periods) are being extended for crews on the rig so that replacement crews can complete quarantine prior to being flown to the rig. In addition to many basic issues this presents, how to pay employees is one of the more intricate.
So far, employees affected by quarantines are still receiving full base pay with a few exceptions. Those few who are not receiving full base pay include:
- Those who have been reclassified as being on furlough while receiving a significantly reduced base pay, but retaining full benefits; and
- Those for whom reduced pay is accruing but will not be paid until some point in the future
Most companies who are paying full base pay indicate they are hoping to recapture compensation paid while not working on the rig by extending hitches without extra days’ pay after COVID-19 is better under control.