DNEG Asks Global Staff Earning Over $43,200 To Take A Three-Month Pay Cut (EXCLUSIVE)

In the vfx industry, the coronavirus is really starting to bite. In response to the halt in live-action production, global vfx producer DNEG is asking all staff earning more than £35,000 (USD$43,200) to take a pay cut for at least three months. This policy applies to all its locations, including London (where it is headquartered), L.A., Vancouver, and Montreal.

BECTU, the union that represents the U.K.’s media and entertainment sectors, was the first organization to publicly address these cuts (as regards the London office only). It says that they amount to between 20% and 25% of salary. DNEG declined to comment on these figures to Cartoon Brew.

A statement put out by the Animation & Visual Effects Union (AVU), a branch of BECTU, describes DNEG’s proposal as, in some cases, a “take-it-or-leave-your-job” package imposed with “very short consultation deadlines.” Affected staff have been given two weeks to respond to the proposal; the deadline is April 30. Reductions will take effect on May 1, and the arrangement will be reviewed in three months.

AVU is essentially concerned about two things: the justification for these cuts and the terms on which they’re being proposed.

The union is calling on DNEG to convincingly demonstrate to its staff that the cuts are necessary. It wants the company to give “a detailed overview of their financial position to workers before requesting cuts,” and to give staff time “to access independent advice to interpret such information so that they can understand the way the burden of this issue is being shared between staff and shareholders.”

For staff who do take a cut, DNEG should clarify the terms on which they’re doing so, the union says. It wants all money that staff lose through these cuts to be “paid back before any further dividends are paid to shareholders,” and assurances to be given to them “about job security.” Losses they incur should be repaid if they are subsequently made redundant, it adds.

Talking to Cartoon Brew, AVU chair Joe Pavlo says, “I’m not saying this is the case, but we would be concerned that this is more about protecting shareholders than jobs.” He suggests that DNEG workers’ faith in their management was dented last year, when the company was preparing an IPO (which has since been indefinitely postponed). The union understands that long-term employees asked whether there would be a staff shareholder scheme, and were told no.

Paul Evans, BECTU’s assistant national secretary, fears that DNEG might be trying to use the crisis as a chance to “undercut everybody else and essentially force wages in a race to the bottom in vfx.” He evokes the unfavorable terms on which the U.K.’s vfx workers are already generally employed: basic sick pay, widespread unpaid overtime, etc.

Given the nature of film and tv production, the downturn in the vfx industry is expected to come with a delay — possibly after government support schemes have ended. “What might happen,” continues Evans, “is that people take a pay cut now, the companies survive, then once the furlough scheme that the [U.K.] government are doing is finished, those companies could just lay staff off.”

Earlier this month, DNEG shut down its tv vfx unit in Los Angeles, leading to the loss of around 20 jobs. It attributed its decision to the disruption of production schedules due to the coronavirus pandemic.

DNEG insists that its new policy of salary reductions is aimed at preserving jobs, and told Cartoon Brew that affected employees will receive some compensation through equity. It added that it doesn’t intend to give shareholders any dividends in the near future. Namit Malhotra, the company’s CEO, has forgone his salary for the year. He issued the following statement to Cartoon Brew:

This is not just about our company; this is an industry-wide issue that is affecting all companies in our sector. Fortunately, we have a strong slate of projects in production from before the outbreak, but we know that the main impact of the disruption will be felt later this year, when we expect a lag between productions resuming and vfx schedules restarting.

This decision to introduce salary reductions has not been taken lightly, and our aim is to preserve the jobs of as many of our employees as possible while ensuring that we continue to deliver the best possible work for our clients. To help mitigate the effects of the reductions we are introducing an equity program to help fund the repayment of sacrificed salaries.

We continue to work proactively with our clients to protect our employees, our projects, and our business, and, as we navigate the challenges ahead, we commit to always trying to do the right thing, protecting and supporting as many of our employees as possible around the world.

AVU has published detailed guidelines for workers facing cuts. It is also calling on companies to get in touch before making any such proposals. Under U.K. law, a company is only obliged to negotiate with a union when half its workforce favors union recognition. AVU hasn’t yet reached this threshold at DNEG or elsewhere — but membership “is going through the roof over the last week,” says Evans, adding that many are joining from DNEG.

Meanwhile, other major vfx companies are discussing cuts too, although not to the extent seen at DNEG, as far as AVU knows. “They’re all watching DNEG,” says Pavlo. “If DNEG gets away with these cuts, I tell you, every single person in London is in trouble.”

(Image at top: “Westworld,” on which DNEG handled vfx.)