Virgin forces pay cut on IT contractors

IT contractors face 15 per cent pay reduction in company's latest ultimatum

Virgin Media's IT contractors face a fresh ultimatum to reduce pay rates

Virgin Media has told 400 IT contractors that unless they accept a 15 per cent per day reduction in pay, the company will terminate their contracts.

The company pulled a similar stunt last year, offering a “take it or leave it” 10 per cent pay cut to IT contractors.

The reduction in pay rate applies to IT contractors earning more than £300 per day.

The decision comes soon after the company's announcement that its quarterly operating income increased by 15 per cent last quarter.

Virgin Media declined to comment on its reasons, stating: “We regularly review our arrangements with suppliers to ensure we are getting the best value from these relationships.”

PCG, an independent not-for-profit professional association representing more than 20,000 freelance workers from several sectors including IT, called for fairness and honesty when dealing with freelancers, of which there are currently 1.4 million in the UK.

“Virgin and all other companies who use freelance workers must focus on the value of individual relationships,” said Iain McIlwee, head of commercial development at PCG.

“As with any commercial contract, effective relationships rely on mutual respect and establishing proper business terms in the first instance and sticking by them until a contract is concluded.

“I would call on all companies and organisations using freelance workers to treat them with honesty and respect, and in return see how they benefit your company.”

In February 2010, CEO Neil Berkett was upbeat about the company’s financial situation.

“In the fourth quarter, we successfully grew both the size and quality of our customer base,” he said when announcing the end-of-quarter financial results.

“This demand underpinned growth across all our product lines and record average revenue per user which, combined with stable churn, drove a 6 per cent increase in consumer cable revenue and 55 per cent free cashflow growth.”