When Labour hit the campaign trail back in 2024, two features of its manifesto grabbed the attention of employment lawyers, particularly those of us with a focus on the offshore energy sector: (1) the plan to introduce an employment rights bill which would see the biggest overhaul of employment rights in a generation; and (2) the ambition to make Britain a clean energy superpower, while taking a “phased and responsible” approach to existing offshore energy roles which, crucially, will “not jeopardise jobs”.
These mission statements are bold and ambitious, but one key challenge is to ensure that the new employment rights bill does not become an obstacle to achieving the country’s energy transition goals in a way that preserves jobs and enhances economic opportunity. This article considers this challenge through the lens of the offshore energy industry.
The UK’s offshore energy industry has played a fundamental part in powering the nation for over five decades. Robert Gordon University’s Energy Transition Institute (ETI) estimates that 154,000 UK jobs are supported by the offshore energy sector, with 115,000 of those being concentrated in the oil and gas industry. As the country races to meet its net zero commitments, the offshore energy sector is in a position of unprecedented change and uncertainty. In a report published earlier this week, the ETI estimates that even a well-managed transition to renewable energy would see oil and gas workforce numbers decline to around 71,000 by 2030, while a more rapid decline in the oil and gas industry in a race to meet net zero targets could reduce the workforce by 50%. As jobs in oil and gas will gradually (or rapidly, depending on the government’s approach) decrease, the National Grid estimates that, in turn, 400,000 roles will need to be filled to build the workforce required to sustain net zero targets – 260,000 of which will be newly created for the purposes of the transition.
Research undertaken by the ETI suggests that 90% of the existing offshore workforce has transferable skills that will facilitate a transition into clean energy roles. This gives cause for optimism. However, employers within the offshore energy sector face some challenges. The energy profits levy (the so called “windfall tax”), which applies a 78% headline rate of tax to oil and gas companies, is causing many of these internationally mobile companies to divert their investments overseas. Much has been written about this, and while it is not the focus of this article, it remains a significant factor that cannot be ignored. A further challenge is ensuring that the clean energy jobs of the future are available at the same time as traditional roles decline. That can only be achieved through significant public and private sector investment, combined with a fast and efficient planning regime. Terms and conditions will also be crucial: jobs in the oil and gas industry are traditionally very well paid. Clean energy jobs will need to offer an attractive combination of pay, benefits, and working arrangements, otherwise talent will be lost overseas.
To underpin all of this, an employment rights regime that is stable and incentivises energy sector employers to invest in training and skills development is essential. The crucial question is whether or not the government’s Employment Rights Bill (ERB) achieves this?
The ERB proposes to significantly enhance rights and protections for employees. Key features of the bill include:
unfair dismissal protection (currently reserved for those with two or more years’ continuous service) will become a day one right;
giving trade unions an enhanced role to play in workplace negotiations, through a combination of a right of direct access to the workforce of any employer to recruit members, a significant lowering of the thresholds of support required for a trade union to gain recognition (a status which affords the trade union the ability to negotiate with an employer in relation to the terms of employment offered to its workforce), and making it far easier for trade unions to gain a mandate to call for strike action;
the ability of employers to “force through” changes to terms and conditions of employment by serving notice under the existing contract and offering employment under a new contract will be significantly curtailed; and
requiring employers to make offers of guaranteed hours to zero hours workers in certain circumstances.
From the point of view of the worker, these changes appear to be a cause for celebration, but there may be unintended consequences. The introduction of these new rights may cause employers to take a more conservative approach to recruitment, as the ability to quickly part ways with an employee when things are not working out will be curtailed. At a time when recruitment and training to fulfil the needs of the energy transition is critical, this may be less than helpful for those in the offshore industry. With potentially increased union membership across the workforce, employers will need to recognise that if salaries are not consistent with those historically offered in the oil and gas industry, disagreements over pay packages may cause significant disruption to operations. The removal of one-sided flexibility and the redressing of the balance of power between employer and employee must be welcomed in certain sectors where workers have suffered exploitation, but that is not the case for the offshore energy sector which on the whole enjoys good pay. These changes may simply make it harder for employers in the sector to adjust to the needs of the energy transition.
The government has identified the autumn of 2026 for the implementation of the majority of rights under the ERB. With this in mind, employers in the offshore energy sector may feel it is beneficial to accelerate investment and workforce planning decisions related to the energy transition. Time will tell if the government’s plans for energy transition and an employment rights revolution can sit in harmony with one another.