Shell agents in legal threat

Oil giant Shell is facing a group legal action that could radically change the way it runs its petrol stations.

Oil giant Shell is facing a group legal action that could radically change the way it runs its petrol stations.

About 30 forecourt managers, who claim they were forced into signing unfair contracts, are on the brink of taking Shell to an industrial tribunal to establish the exact status of the people who run Britain's petrol stations.

Officially, the 30 managers were self-employed agents working for Shell; they paid for all the stock sold in the shop, and any staff they hired were their employees, not Shell's. People signed up as Shell's agents, believing that as self-employed managers, they would have control of the way their forecourt was run.

Managers assumed, for example, that they would be able to run the lucrative shops in their own way, and say they based their decision to sign on the profit forecasts shown to them by Shell. Although this worked well initially, the managers claim that subsequent contracts robbed them of all control. They say Shell did not allow managers to stock the shop with their own choice of goods, and sold everything to them itself. It also took away managers' ability to generate margins by insisting on a fixed retail price for everything sold in the forecourts.

Because of the very tight restrictions they worked under, the Shell managers believe that they should actually be treated as full employees rather than self-employed agents, and are planning to use the tribunal to get legal clarification on their status.

But if the action is successful, it will send huge shock waves through the industry. If the managers become reclassified as employees, it means that Shell has to respect a huge range of employee rights that the old scheme allowed it to avoid. The managers would no longer have to invest their own money in stock, could not be forced to work such long hours, and would not be so vulnerable to a suddenly terminated contract.

This could be highly damaging for Shell. Not only would Shell have to re-plan the entire structure of its petrol-station management system, but it would incur all the costs that are saved under the existing one, which could run to tens of millions of pounds.