Oil and Gas: complex regulations in the industry impact payroll

The oil and gas sector has unique labor requirements that demand in-depth knowledge and management skills

The oil and gas industry is pivotal to Brazil, positioning the country as a key player in the global market. This sector operates under its own set of labor rules, shaped by the unique nature of its activities.

In terms of payroll management, these specificities must be carefully considered. In addition to complying with legislation, it is essential to also account for applicable regulatory standards and collective bargaining agreements in this industry. 

 

 

 Legislation X collective bargaining and labor agreements

The regulations issued by government agencies and these normative agreements work in tandem. However, it is important to note that in cases where there is a conflict between collective agreements and the law, the rule that is more favorable to the employee must take precedence.

 

Working hours

Errors in personnel management can expose your company to labor lawsuits, making it crucial to understand and apply the rules correctly. Working hours must be clearly outlined in the employment contract and must not exceed the limits established by law or collective agreements.

In roles that require continuous presence, such as on oil platforms, shift schedules like 7x7 and 14x14 (as defined by bargaining and agreements) are common. These schedules alternate between periods of consecutive work days followed by a set number of rest days. 

Another common practice in the industry is the on-call system, where employees are available 24 hours a day to provide assistance as needed. 

According to Law No. 5,811/1972, a worker cannot be on duty under a shift rotation arrangement for more than 15 consecutive days. After this period, the employee must be granted a rest period.

This law defines two types of shift rotation arrangements:  

It is also essential to comply with the rest requirements:

• 8-hour shift: 24 consecutive hours of rest after every three shifts worked.
• 12-hour shift: 24 consecutive hours of rest after each shift worked.
• On-call duty: 24 consecutive hours of rest for each 24-hour on-call period.

 

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Premium payments and their impact on payroll

Effective management of payroll additions and deductions is crucial for ensuring compliance with laws and agreements. Beyond legal compliance, understanding these elements and their implications is key to fostering a healthy relationship with employees, which in turn contributes to a positive and satisfied work environment.

Given that the workforce in this sector is typically highly skilled, costly, and difficult to replace, minimizing payroll errors is particularly important.

 

Overtime

Working beyond the hours stipulated in the contract is subject to overtime pay, which, if not properly managed, can significantly impact payroll costs.

To address this, many companies implement strict controls over the approval of overtime, aiming to optimize work schedules. It is also common to adopt compensatory time arrangements, where extra hours worked are offset during periods of lower demand.

Once again, it is crucial to follow the guidelines set out in collective bargaining agreements and negotiations, as the specifics of this issue often vary within the sector.

 

Hazard pay

Hazard pay is provided to compensate for health risks associated with certain working conditions. It is typically calculated as 10%, 20%, or 30% of the minimum wage, depending on the level of exposure to risks. It is crucial to be mindful of any agreements that may stipulate different rates.

 

Dangerous work

Employees working in dangerous conditions, where there are inherent risks, are entitled to an additional 30% of their salary. However, given the highly specific nature of operations in this sector, it is essential to review collective agreements for specific provisions regarding this benefit.

 

Relocation allowance

Given the project-based nature of many services in this sector, it is common for employees to be transferred to locations different from where they were initially hired. In such cases, the company is required to provide a relocation allowance of no less than 25% for as long as the situation persists. 

 

Other bonuses

Collective agreements often provide for other payments, such as night shift premiums, bonuses for working at heights, confinement allowances, and more. 

 

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O&G: payroll considerations

Managing payroll in the oil and gas sector requires both a thorough understanding of the rules and a high level of organization. Payroll should be “handled” throughout the month to avoid delays or complications on the closing date. For companies with larger workforces, it is a good practice to review time tracking, shifts, and bonuses on a weekly or bi-weekly basis.

This approach provides ample time to make adjustments and avoid payment issues. It goes without saying that payroll errors can lead to employee dissatisfaction and mistrust, which is particularly detrimental in this industry where minimizing turnover is a strategic priority.

One effective solution is to digitize personnel department activities whenever possible and implement an integrated payroll system, streamlining the process and reducing the likelihood of errors. 

 

Labor consultancy with sector expertise

DPC offers professionals with extensive experience in serving oil and gas companies, along with advanced technological resources to ensure efficiency and security in payroll management and processing. Contact our team today: dpc@dpc.com.br.