Thousands of workers have been laid off from work in the past twelve months since Npower’s turbulent struggle with corporate exposure, level of debt, and the subsequent merger with E.ON.
Several reports surfaced in January 2019 alleging that job cuts are in the future for Npower which became a reality a month after when the company announced 900 job losses due to significant financial losses.
Npower’s merger partner E.ON announced in February 2019 that it was eyeing a restructuring of its UK arm, stating that around 4,500 employees could be in danger of losing their jobs by 2021. In October 2019, another 500-600 from its 9,000-strong workforce got the axe as the energy market became extremely competitive. It also blamed the effect of the price cap set by Ofgem as another reason for the decision to sack employees.
In the face of the coronavirus pandemic, E.ON and Npower yet again caused employees to worry as they announced the furlough of around 4,000 workers. Staff handling smart meter readings and engineers have found it difficult to carry out their roles due to the government-sanctioned lockdown.
Before E.ON entered the picture, Npower was poised to merge with another Big Six energy provider, SSE, in late 2018. However, several issues led to the failure of the merger. SSE stated the new price cap slashed the projected profit of Npower, which added to its higher level of debt and caused SSE to scrap the proposed merger.
Since then, employees from Npower feared for their tenure as the supposed plans fell through. By February 2019, the company stated it would let go of 15% or 900 of its workers throughout the year. The move was made to cover part of the financial losses and stay afloat in the market. Then CEO Paul Coffey blamed the unsustainable competition brought by challenger firms and imposed price cap as the main reasons for the job cuts.
The move to get rid of employees lowered the company’s operating costs and allowed E.ON to go ahead with the palatable merger and increase its market share to 13% in exchange for Npower’s troubled company.
In February, E.ON made the move to restructure Npower, now its UK arm, which would affect 4,500 workers. The firm stated the restructuring costs around €586 million and is planned to go on for two years to ensure consistent profitability for its UK operations.
E.ON CEO Johannes Tessen cited the challenging UK market as the reason to change up its operations in the country. As a result, 4,500 jobs from 5,700 of its workforce are to be laid off by 2021.
Several months after the first wave of job cuts was announced, E.ON made another decision to axe around 500-600 employees from 9,000 of its workers in October 2019 which got branded as a ‘cruel blow’ to NPower workers.
A spokesperson for the company stated that UK energy suppliers suffered from massive distortion due to the price cap and extreme competition that caused significant losses to some companies and pushed them to cut jobs.
E.ON UK and Npower, both owned by parent company Germany’s E.ON, recently announced that it had furloughed about 4,000 workers amid the ongoing crisis caused by the coronavirus pandemic. Engineers and smart meter reading staff have been affected by the government lockdown, making it challenging for them to carry out their job.
An e.ON spokesperson said in an email that 3,000 workers out of the total 7,500 regular employees are now on furlough arrangements. Some of the affected include customer support staff and metering technicians across the business and residential operations.
The firm further said that the affected staff would get 80% of their corresponding salary under a government-led scheme. The company will also top-up payments so that everyone can receive the total sum of their salary.
It is yet to be seen whether the 3,000 furloughed staff will be back in to work or will get the ‘official’ job cut when lockdown restrictions are lifted.