BNP Paribas cuts tech contractor pay rates

BNP Paribas is threatening its entire temporary IT workforce with termination unless they agree to do the same work for less money.

The French bank told IT contractors across its UK and global operations that they could only keep their jobs if they cut their pay rates by at least four per cent a day.

Enforceable from July 2015, the ‘take it or leave’ pay cut has “practically wiped out” some IT contractor teams in Paris, said a source, where the bank is headquartered.

  Ultimatum: The French bank told IT contractors across its UK and global operations to lower their pay rates or leave.

Ultimatum: The French bank told IT contractors across its UK and global operations to lower their pay rates or leave.

But speaking to Moore News yesterday from the French capital, a BNP spokesman declined to be drawn on the rate cut which, internally, the bank blames on “external market conditions”.

“Following a due diligence process”, adds a memo sent to BNP’s IT contractors, “a decision has been taken to reduce spend on contractor workers within IT.

“We would like to assure you that this initiative bears no reflection on the skills or the services that have been provided to BNP Paribas.”  

The bank’s rate cut comes in the same week that it was fined almost £1m by Hong Kong’s securities regulator for failing to report so-called ‘cross trades’ over a 10-year period.

BNP was also fined in July 2014 – for a record £5.1bn – by US authorities for breaking American sanctions against trade with Sudan, Iran and Cuba.    

But there is no evidence of either penalty against the bank relating to its move to cut IT contractor pay by a minimum of 4%; a figure which looks like a market alignment.

BNP is not usually afraid to slash IT contractor pay. It did so in the grip of the financial crisis in 2008, and it cut daily rates again in 2011 by a non-negotiable 15%.

BNP’s current IT contractor rate cut is also without exemptions, yet some UK-based IT contractors claim they are using it to secure flexible working arrangements.

Others are walking. “[Four per cent is] not as bad as some [rates are being reduced by here at BNP Paribas], and they gave me a month’s notice, but I don't like being bullied… [so] bye.”

Elaborating on his intention to reply 'non-acceptance' to his line manager, the IT contractor at a BNP London office said the cut equated to him working for the bank for roughly two weeks free of charge.

“[But] I expect that the majority of contractors will take it on the chin,” he said, referring to decision-day this Friday.

“Though BNP may regret terminating contracts before the summer lull when many hiring managers will be going on holiday, as those [IT contractors] more confident in their demand will just walk.”

David Ward, a director of IT jobs agency SQ Computer Personnel agrees that IT contractors voting with their feet is now a real prospect that BNP must face, even if not immediately.

He told Moore News last night: “Of those IT contractors affected by the [only] reduction [our agency has experienced in the last 12 months], about 15% chose to not accept it and took on assignments with other organisations.

“IT contractors are free to operate in an open labour market and while income isn’t the only driver, it is a significant influencer. Enforcing ‘take it or leave’ rate cuts mid-contract in most instances will cause contractors to look at the market and see what other options are available”.

Micro-business sector makes early demands of Cameron

New ministerial posts; a skills-led immigration policy and a conciliation service for the unpaid -- just three of the demands that the micro-business sector is making of David Cameron and his new government.

Submitted within just 24 hours or so of the new Tory administration, the demands are from two trade groups, IPSE and the FCSA, and two staffing bodies, APSCo and the REC.

“A majority government brings stability and certainty that is good for business,” said the Association of Independent Professionals and the Self-Employed (IPSE).

  Deluged: David Cameron was bombarded with policy requests within 24hours of being re-elected as prime minister.

Deluged: David Cameron was bombarded with policy requests within 24hours of being re-elected as prime minister.

It also said: “We [know that] a new business conciliation service would help address some of the issues stemming from late payments.”

The Recruitment & Employment Confederation (REC) echoed concerns expressed last week -– that the government’s promise of an EU referendum could create uncertainty.

More immediately though “we need to convince the new government to adopt a sensible and balanced approach to immigration” said the REC, “so that UK businesses can hire the talent and skills they need to succeed.”

Unifying the staffing bodies and the trade groups is the prospect of their members being affected by a withdrawal of tax relief on travel and subsistence (T&S) expenses.

“The T&S legislation would have a negative impact on the working lives of many”, said the Freelancer and Contractor Services Association (FCSA), cautioning the new government which, “on the whole”, it said it welcomes.

The association added: “They [the Conservatives] seem to have the better understanding of our sector… but we still have a long way to go as they seem intent on...[introducing the T&S legislation].”

To ease its own but similar concerns, APSCo vowed to start “pushing” the new government to draw up a “new regulatory framework that differentiates highly paid, highly skilled” consultants from other workers who, despite also being independent, are “vulnerable”.  

The Association of Professional Staffing Companies said: “Allied to this, we will pursue the appointment of a junior minister with a specific remit over flexible staffing”.

Editor's Note: The editorial image for 'Micro-business sector makes early demands of Cameron'  (via Flickr Creative Commons license and unchanged) of David Cameron is courtesy of The Prime Minster's Office.

Amend ‘devastating’ tax rule Section 58, MPs tell Osborne

Eighteen MPs from five political parties have signed a letter to George Osborne urging him to amend a retrospective change to tax law, which threatens to force droves of people into bankruptcy.

  Under pressure: Chancellor George Osborne is facing demands from 18 MPs to change tax law.

Under pressure: Chancellor George Osborne is facing demands from 18 MPs to change tax law.

Members of Parliament from the Conservatives, Labour, the Liberal Democrats, the Greens and the Democratic Unionists say they have wirtten to the chancellor asking him to repeal the backdated element in Section 58(4) of the Finance Act 2008.

Coordinated by Tory MP Jeremy Lefroy, the letter explains that Section 58 (known as 'BN66' after the Budget Note it was issued upon) made changes to the law regarding double-taxation treaty tax-planning arrangements.

Relied on by many independent professionals to manage their tax liabilities, the arrangements were debated and approved by parliament in 1987. They were even included in HM Revenue & Customs’ own tax manual.

Although HMRC accepted claims for relief under the arrangements (while challenging some others), the Labour government claimed in 2008 that they constituted “abusive tax avoidance” and shut them down without warning, both prospectively and retrospectively.

“Retrospective legislation is against the principles of a democratic society,”  said Alistair Renshaw, chairman of campaign group No To Retro Tax (NTRT), which is supporting the MPs’ call for repeal.

“There is [also] real concern about how HMRC acted in persuading ministers to make such sweeping and unannounced retrospective changes, going back so many years, to a practice that parliament had said was legal and HMRC had in the past approved and said could not be challenged.”

Due to the law being backdated, thousands of professional workers now face tax demands going back many years including penalties and interest – with some liabilities running into the hundreds of thousands of pounds.

A NTRT survey of affected taxpayers adds that almost three-quarters cannot meet HMRC’s demands from savings and liquid assets, while about half (47per cent) will have to sell their homes. Worse still, almost a third will be forced into bankruptcy.

The group reflected: “Despite doing nothing more than following the law as it stood at the time, thousands of people are facing devastating financial hardship as a result of HMRC making such sweeping and unannounced retrospective changes to tax legislation in this way.”

Pointing to the MPs’ letter, which calls for Section 58 to only apply from the date it was announced, Mr Renshaw said it was “heartening” that many members of parliament have set aside their political differences to challenge what he sees as a wrongdoing by officialdom.

“There must be redress for the victims of HMRC’s actions in this case,” Mr Renshaw appealed. “I would urge the government to use the opportunity to repeal subsection 4 of Section 58 of the Finance Act 2008.”