Shell Takes Sacked UK Workers' Overseas-Service Tax Breaks

If an employee enjoyed the full benefit of the foreign service tax relief, they would receive almost 16,000 pounds more. If they had spent 75 percent of their career abroad the payment would be tax free.

Shell declined to say how many people might be affected by the policy change which should mostly affect UK employees.

Shell said in December it planned to cut 2,800 jobs after its takeover of BG but did not say how many UK workers would lose jobs. After completing the BG deal in February, Shell announced another 2,200 cuts in May, 475 of which would be from its oil and gas production division in the United Kingdom and Ireland.

Usually companies don't take account of the foreign service tax break when calculating employees' payoffs as part of large scale redundancies, said David Whincup, employment partner at law firm Squire Patton Boggs.

This means it is up to the departing worker to claim back a refund in respect of the Foreign Service Relief, but following its policy change Shell will claim the benefit instead.

Employment experts said Shell's approach was not common, although Alain Cohen, director at employment law firm Ashby Cohen, said he had heard of another oil company doing the same.

According to a report produced by law firm Mayer Brown in 2013, a company needs to reach agreement with the UK tax authority, Her Majesty's Revenue & Customs, before it can begin such a scheme.

The UK tax authority declined to comment on the Shell case, citing taxpayer confidentiality.

(Editing by David Clarke and David Goodman)


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