Contingent Worker Policy

CONFIDENTIAL

U.S. HR Policy & Benefits

May 2021

CONFIDENTIAL 

TABLE OF CONTENTS 
0 Purpose...................................................................................................................3 
1 Executive Summary ...................................................................................................3 
2 Contingent Workers ..................................................................................................3 
3 Geographic Application of the Policy ...........................................................................6 
4 Misclassification Risk .................................................................................................7 
5 Recommended Use of Contract Workers Through a 3
rd
 Party vs. Independent Contractors, Use 
of IQNavigator (IQN) and the Contractor Services Desk (CSD) .................................................7 
6 Duration of Relationship .............................................................................................8 
7 Contractor Extension Process (For Contract Labor Contingent Workers Only) .......................8 
8 Guidance on the Use of Former Employees (Including Retirees) .........................................9 
9 Contractor Background Screening.............................................................................. 10 
10 Contractor Substance Abuse & Searches ................................................................... 11 
11 Questions ............................................................................................................ 12 
 
   

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This information is subject to change depending upon legal developments and is relevant to all

contingent workers utilized in the United States. Please note that regulations and terminology may

differ outside of the United States.

15.0 PURPOSE

This policy has been designed to provide Human Resources & Line Managers in the Shell

Companies in the United States a high-level overview and guiding policy on the different types of

contingent workers available as well as how and when each should be used.

15.1 EXECUTIVE SUMMARY

The purpose of the Executive Summary is to provide a high-level overview of the Shell Contingent

Worker Policy, describe business impact and risk, and review highlights of the policy for

appropriate utilization of contingent workers. This document may be distributed to Line Managers

on an as needed basis.

15.2 CONTINGENT WORKERS

Throughout this document, you will see the term “contingent workers” used. This term refers to:

▪ Contract Labor (includes contract workers through a 3rd party agency and independent

contractors)

▪ Consultancy Services (includes contingent workers provided as part of a service contract or

outsourcing arrangement and independent consultants)

Definitions

Contract Labor: Contract Labor consists of supplemental, non-employee staff used temporarily to fill

skill gaps or to provide additional project resources. Contract Labor is typically provided by a

manpower agency. The contract labor worker works within the Shell organization under the general

guidance of a Shell hiring manager. Shell maintains responsibility for delivery. Little or no

responsibility is transferred to the supplier or their staff. Knowledge is solely contributed from the

supplied worker. Shell manages turnover. In addition to “what” is delivered and “when”, Shell

maintains control over:

▪ “who” delivers the service

▪ “where” the service is delivered from, and

▪ “how” service is delivered.

While the service is normally required on a “full time” basis, it is invariably temporary rather than

permanent, and/or not part of Shell’s core activities.

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There are two (2) primary types of contingent workers that fall within “Contract Labor”:

1. Contract Workers Through a 3rd Party Agency: An individual who meets the “Contract

Labor” definition above and is the employee or subcontractor of a 3rd party. Shell

contracts with the 3rd party for the individual’s services. The responsibility for the

individual is with the 3rd party. Relationship is defined in contract between Shell and the

third party, typically a Master Services Agreement.

2. Independent Contractors (option not preferred, used by exception only): An individual

who meets the “Contract Labor” definition above and has come to Shell directly rather

than through a 3rd party. While this type of “Contract Labor” may be used in certain

circumstances, its use is by exception only. Please see US HR Policy for approval in each

circumstance.

For purposes of a common global language, Shell classifies these “Contract Labor” resources into

the following two types:

Type A: Individual Resources In Established Positions – Contractor Personnel filling a Shell

established position. The details of these Contractor Personnel are to be held in IQN (more

information is found in section 15.5 below). The costs of engaging the Contractor Personnel

as well as the headcount are included in the headcount budget and planning process. Shell

is involved in the selection process of the individual.

Type B: Individual Resources In Non-Established Positions – Contractor Personnel filling a

budgeted position greater than 1-day duration. The details of these Contractor Personnel are

to be held in IQN. The costs of engaging the Contractor Personnel as well as the headcount

are included in the headcount budget and planning process. Shell is involved in the selection

process of the individual.

Consultancy Services: Consultancy Services are provided by a supplier that contracts with Shell to

provide professional services including expert advice within a particular knowledge domain.

Supplier assumes some or all responsibility for service delivery. In addition to providing staff,

supplier is expected to provide access to its Intellectual Property in order to deliver service. Supplier

manages their staff (e.g. turnover). Shell maintains responsibility for “what” is delivered and

“when”, but supplier maintains control over:

▪ “who” delivers the service (staffing)

▪ “where” the service is delivered from, and

▪ “how” the service is delivered

There are two (2) primary types of contingent workers that fall within “Consultancy Services”:

1. Contract Workers as part of a Service Contract or Outsourcing Arrangement: An

individual who is the employee of a 3rd party and works under an arrangement that

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meets the “Consultancy Services” definition above. Shell contracts with the 3rd party for

certain services (such as security guard services, janitorial services, etc.) and the contract

is for the scope of work, i.e., the contract is for a product or service and not for an

individual worker, for which Shell is the customer. This arrangement is for non-core work

that we trust an expert company to perform on our behalf and this arrangement is not for

situations where we need supplemental labor to assist with the peaks of business. The

third party has responsibility for the worker(s), and determines who will perform work

and how work will be accomplished. In many cases, the third party provides an on-site

supervisor to the worker(s). The use of the arrangement is intended to be on a continuing

basis.

2. Independent Consultants: An individual who is normally incorporated and has come to

Shell directly and works under an arrangement that meets the “Consultancy Services”

definition above. The individual must work truly independently, provided the freedom of

action as to the details, methods, and means of performing services. Independent

consultants typically perform services for more than one company. Relationship is defined

in contract between Shell and the independent consultant.

a. An Outcome Based/Milestone Contract is a type of Independent Consultant

arrangement in which the business pays the contingent worker based on the

deliverable achieved. This means the contingent worker is not paid on an hourly

or daily rate, but receives compensation when a particular milestone or outcome is

achieved. PLEASE NOTE: These arrangements should be set up in the beginning

of a project for projects that the Company anticipates will take a significant time

period to complete (greater than 2 years). Existing contingent workers providing

contract labor will not typically meet the criteria to be converted to an outcome

based/milestone contract. Please contact HR Operations more information.

For purposes of a common global language, Shell classifies these consultancy resources into the

following two types:

Type C: Resources on Reimbursable Projects – Contractor Personnel is performing work to

deliver a project scope of work promised by the Supplying Organization which is for an

undefined period. The contract is consequently on a reimbursable basis. The details of these

Contractor Personnel are to be held in IQN. The costs of engaging the Contractor Personnel

as well as the headcount are included in the headcount budget and planning process. Shell

is generally not involved in the selection process of the individuals. Note: This type of

contingent worker should generally not be used If a manager needs Individuals to work as

part of an existing Shell team.

Type D: Outsourced Service/Turnkey Project – Contractor Personnel engaged as part of an

outsourced or turnkey service contract. Shell is typically involved in: a) defining the scope

and objective of the work and b) the management of the service contract against

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predetermined contract performance criteria. The commercial arrangements are on a

deliverable, service level or reimbursable basis. These Contractor Personnel are not to be

included in the headcount budget and planning process. Shell is not involved in the selection

process of the individual.

Contract Labor and Consultancy Services Characteristics

Contract Labor

▪ The contractor typically works in-house at a Shell location or project site.

▪ The contractor may work on tasks in a manner guided by Shell, using Shell equipment.

▪ The contractor fills a position that is part of the Shell organization structure.

▪ The contractor is supervised in the line by a Shell staff member, or is accountable to a Shell focal

point.

▪ The contractor’s employing company (manpower agency) should be on Shell’s list of preferred

suppliers for the provision of contract labor.

▪ The contractor enters time as directed by Shell either in IQNavigator or other Shell -designated

tool. Employing company either submits regular invoices based on days or hours worked

(standard RtP process) or is paid based on days or hours worked and approved in IQN.

▪ Contract Labor is typically paid for as a Cost-Plus model, and rates may be 30% or more lower

than Consultancy Services rates.

Consultancy Services

▪ To provide the service the supplier may require access to Shell systems or services.

▪ The consultants employed by the supplier may or may not be located on Shell premises.

▪ The consultants employed by the supplier should not be selected by Shell for the work, but by the

service providing supplier.

▪ The persons employed by the supplier are not directed or supervised by Shell staff.

▪ The supplier should be on Shell’s list of preferred suppliers for the provision of this category of

service.

▪ Payment is made to the service-providing supplier as part of a Consultancy Service Contract.

▪ In addition to the Cost-Plus model (similar to Contract Labor), suppliers of Consultancy Services

also charge for their IP, cost of training their staff, suppliers risk, management and oversight of

project/resources.

15.3 GEOGRAPHIC APPLICATION OF THE POLICY

This policy is to be applied to contingent workers inside the United States. The policy may apply to

US Citizens (or individuals authorized to work in the US) who are contingent workers on assignment

outside of the US since they may return to work in the United States. The policy may apply to non-

US companies contracting with US citizens to perform work for the non-US company (either to

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perform the work in the US for a project or business outside the US or to perform the w ork outside

the US).

It does not apply to Non-US citizens working outside the United States (even if the work is

contracted by or for a US company).

15.4 MISCLASSIFICATION RISK

With regard to the use of contingent workers there is always a level of risk to be considered. The

risk is that the worker will be considered a “common-law” employee and Shell could be responsible

for complying with all employment tax, Fair Labor Standards, and other federal and state

employment laws. Courts, legislatures and agencies are looking more closely at contingent worker

issues; therefore, the risks of misclassifying an individual as a contingent worker are increasing.

The potential risk of a determination that a contingent worker should have been classified as a Shell

employee is higher when: 1) the extent of control the company exercises over the contractor is

similar to the degree of control exercised with regular Shell employees, and/or 2) the duration of

the relationship is longer or has encompassed more than one contract. As a result, this policy is

provided to assist line managers in utilizing all types of workers appropriately.

15.5 RECOMMENDED USE OF CONTRACT WORKERS THROUGH A 3

PARTY VS. INDEPENDENT CONTRACTORS, USE OF IQNAVIGATOR

(IQN) AND THE CONTRACTOR SERVICES DESK (CSD)

It is expected that line managers engage contingent workers through a 3rd party rather than utilize

independent contract agreements, unless there is truly an independent consulting relationship. There

are several advantages: (1) the relationship is between Shell and the 3rd party vendor as opposed

to the worker, (2) duration can be more easily tracked, and (3) the vendor is responsible for the

proper withholding (Federal, state & local taxes, FICA).

IQN is the Requisition-to-Pay (RtP) system of Shell for contingent workers. IQN is a web-based

vendor management system utilized by Shell to procure third party resources. The tool provides

management reporting on key procurement trends within this category of spending. IQN facilitates

the the posting and filling of openings for contingent worker roles Shell hiring managers need to fill

via preferred/approved suppliers. The contingent worker's billing is completed via IQN.

The Contractor Service Desk (CSD) is the global starting point for the procurement of all contingent

workforce needs. To ensure the highest data quality possible, the CSD will access IQN on behalf of

requesting managers and manage the resourcing request per agreed guidelines.

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15.6 DURATION OF RELATIONSHIP

As noted above, the length of the relationship has a correlation with the level of risk. The duration

limit for contingent workers who are considered "consultants" may be beyond the 24-month

standard duration depending upon the need. The duration limit for contingent workers who are

considered "contract labor" is 24 months. This duration limit applies even if the contract labor

changes suppliers or changes to “consultant” classification. After 24 months, the contingent worker

may be extended in rare circumstances for a short duration if the Line Manager has a strong

business case and exit strategy for the contingent worker as discussed in Section 15.7.

Exceptions beyond 24 months are intended to be very few, however, if a business necessity

genuinely exists, the following are some options to consider:

▪ Follow the Contractor Extension process for >24 months and provide the business case for an

additional extension to your HR VP, as detailed within Section 15.7.

▪ Hire the individual as a regular employee or fixed term contract employee (this is to be executed

consistent with local hiring procedures, have the appropriate approvals and comply with the

Contractor Conversion Policy). For additional information on fixed term contract employees, see

Section 1.4.6 – Fixed Term Contract Employees.

▪ Convert the individual to an approved consultancy service arrangement (approved consulting

arrangements include: 1) an outsourcing arrangement, 2) a service contract, 3) an outcome

based/milestone agreement and 4) an independent consultant agreement). These agreements

must be reviewed and approved by US HR Policy, Shell Legal and Contracts & Procurement

prior to implementation and require a true change in the management of the relationship to be

valid.

▪ Provide a minimum 6-month unpaid break in service. During the break the contractor must be

removed from all Shell sites. After the 6-month absence is completed, the contractor’s time limit

is reset and may provide services for a new assignment. This 6-month break in service applies

even if the contract labor changes suppliers or changes to “consultant” classification.

15.7 CONTRACTOR EXTENSION PROCESS (FOR CONTRACT LABOR

CONTINGENT WORKERS ONLY)

For Contract Labor workers within IQN, there is a centralized Contractor Extension Process. The

CSD will notify the respective line manager 120 days prior to the contingent worker’s end of

assignment date. If a valid business case warrants the contingent worker’s extension, the Business

will need to complete the Contractor Extension Form and forward the completed form to HR Advice.

HR Advice will then reach out to the CSD to research the length of stay in IQN and review Shell’s HR

system for any former employment data (severance, retiree, eligibility for rehire, etc.) before

coordinating the required HR VP approval. The intent of this form is to facilitate a conversation to

discuss the "exit strategy" for the contractor. The "exit strategy" should consist of one of the

following options:

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▪ The contractor will not be needed after the requested end date (project/duties completed), or

▪ We will replace with another contractor who will be trained before the requested end date, or

▪ We plan to convert the contractor to an employee before the requested end date (FTE headcount

approved), or

▪ The contractor is a consultant and is treated as a consultant as defined in the Contingent Worker

Policy.

If the request is approved, the completed approval form should be forwarded by the line manager

to the CSD for uploading into IQN. It should be noted that extensions beyond 24 months will only

be granted in rare circumstances.

When a business need exists to continue the work the contingent worker was performing, other

options exist, as detailed in Section 15.6.

15.8 GUIDANCE ON THE USE OF FORMER EMPLOYEES (INCLUDING

RETIREES)

While discouraged, former Shell Employees may be used as contingent workers provided the

following guidelines are met:

▪ A conflict of interest does not exist.

▪ The worker must be retired or terminated for a minimum of 180 days.

o Exception process: If the former employee is required as a contingent worker prior to the

180-day break in service, the hiring manager should contact HR Operations and

complete the Re-hire Exception Form – 180 Days to seek exception approval from US HR

Policy.

▪ The worker should not be a former employee who left under a severance plan.

o Exception process: If the business is seeking to re-engage a former employee who left

under a severance plan as a contingent worker, the hiring manager should:

1. Rreview the Global Guidelines for Re-Hiring Former Shell Employees,

2. Complete the Re-hire Exception Form – Severance and

3. Contact HR Operations to obtain VP HR Business/Functions approval and US HR

Policy review.

▪ The worker cannot be retained to fill the job that was vacated by his/her termination.

Although some connection with the former job may be unavoidable, the contingent worker's

activities should be of an advisory or project nature (and preferably short-term, e.g., 30-60

days).

▪ The worker should not be a retiree from Shell.

o If the business is seeking to re-engage a Shell retiree as a contingent worker, the

contingent worker arrangement should never be prearranged prior to an employee's exit

and should be considered only in cases of unplanned/emergency resourcing.

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o Exception process: If the business is seeking to re-engage a former employee who left

Shell having met immediate pension eligibility criteria, eligibility for reemployment on

contingent worker basis must be approved by US HR Policy. The hiring manager should

contact HR Operations to initiate the exception process.

▪ If approved, Retirees must not exceed 1,000 working hours for the total duration as a

contingent worker for Shell.

o Exception process: In the rare instance there is a need for the retiree to exceed 1,000

working hours, approvals must be obtained from US HR Policy & Shell Legal prior to the

retiree exceeding the 1,000 working hour limit. The hiring manager should contact HR

Operations to initiate the approval process.

▪ If approved, the Retiree’s contingent worker assignment duration must not exceed a 12-month

period from the start of the assignment.

o Exception Process: Terms longer than one year (12 months) must be approved by US HR

Policy & Shell Legal. The hiring manager should contact HR Operations to initiate the

approval process.

▪ Retirees are to be informed that providing consulting services to the Company could have

adverse tax implications on distributions from qualified benefit plans if they are reclassified as

employees of the Company. In such cases, any annuity payments that such individual may be

receiving from the Shell Pension Plan would be suspended. Also, distributions from the Shell

Provident Fund would also be restricted until such individual obtains 59-1/2 years of age. Any

improper distributions received would be required to be repaid to the plan(s) and may also be

subject to a 10% early withdrawal penalty if under 59-1/2. Accordingly, the former employee

should be advised to seek tax counsel before executing a contingent worker arrangement with

Shell.

▪ All Former Shell Employees should complete the Former Shell Employee Agreement form

available through Contractor Services Desk (CSD).

For Hiring Managers:

For an overview of guiding policies and information on the exception process for re-engaging a

former employee as a contingent worker, please reference the US Contingent Worker Former

Employee Guidance document.

Contact HR Operations for more information when considering a former Shell employee as a

contingent worker.

15.9 CONTRACTOR BACKGROUND SCREENING

Where permitted by law, US contingent workers shall be required to undergo successful background

screening prior to assignment to Shell premises, jobsites or projects. The Contractor and

Subcontractor firms shall be solely responsible for pre-assignment and recurring background

screening for persons planned or scheduled for assignment on Shell premises. Any Contractor firms

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shall ensure this requirement is extended to subcontractors, including consultants that the contractor

firm elects to use.

Pre-assignment background screening for contingent workers shall be considered acceptable if 1) a

successful background was completed by the contractor or subcontractor firm within the twenty-four

(24) months immediately preceding assignment of the contingent workers to Shell premises or 2) the

individual contractor possesses a valid commercial driver’s license (CDL) with Hazardous Materials

Endorsement (HME).

Background screening shall be at the contractor’s or subcontractor’s firm expense and shall not be

reimbursable by Shell unless agreed upon in a written contract. The results of contractor background

screenings should not be shared with Shell. Contractor and Subcontractor firms shall authorize Shell

representatives to conduct audits, compliance reviews and investigations, which may require review

of background screening records. Contractor or Subcontractor firms that falsify and/or knowingly

report an incorrect background status for a contractor assigned to and/or working on Shell

premises shall be dismissed and removed from the job and barred from conducting further business

with Shell. Any contractor or subcontractor who falsifies information and/or knowingly reports

incorrect information regarding a person assigned to Shell premises, worksites or projects shall be

dismissed and removed from the job and barred from conducting further business with Shell.

For further instruction on Background Screening requirements refer to the Background Screening

Requirements and Procedures owned by Shell Corporate Security.

15.10 CONTRACTOR SUBSTANCE ABUSE & SEARCHES

Searches & Periodic Testing

In connection with its policies against use or possession of illegal or unauthorized drugs or

controlled substances, intoxicating beverages, or weapons of any type, including firearms on its

premises, CONTRACTOR agrees that entry onto COMPANY GROUP WORKSITES constitutes

consent to and recognition of the right of COMPANY GROUP and its authorized representatives to

search the person, vehicle, and other property of individuals while on those premises. Such searches

may be initiated by the Company without prior announcement and will be conducted at such times

and locations deemed appropriate. Additionally, CONTRACTOR agrees that entry onto Company

Premises (includes premises for transportation to Company assets, e.g., heliports, maritime

terminals, etc.) constitutes consent to periodic drug/alcohol testing. CONTRACTOR Personnel who

refuse to cooperate and/or test positive during these searches and/or periodic drug/alcohol tests

will be banned from Company managed locations.

Substance Abuse

CONTRACTOR is responsible for ensuring that all CONTRACTOR Personnel do not use, nor are

under the influence of, possess, transport, distribute or sell alcoholic beverages, illicit/illegal drugs,

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drug paraphernalia or misuse legitimate prescription drugs while on Company Group Worksite.

CONTRACTOR Personnel and Sub-Contractor Personnel who are found in violation of these

prohibitions will be banned from the worksite and may be referred to law enforcement agencies for

their action.

If all or part of the performance of SCOPE on COMPANY GROUP WORKSITES or in transportation

of its products or materials: i) requires exercise of independent action and results in direct and

immediate irreversible effects; and ii) creates substantial risk of serious physical injury to fellow

employees or the general public, or significant environmental damage, then CONTRACTOR must

have in place at its own expense a substance abuse policy meeting applicable STANDARDS OF

PRACTICE (e.g., contract companies that are considered safety-sensitive).

STANDARDS of PRACTICE for a substance abuse policy include, at a minimum, 1) meeting DOT

standards for regulated testing, 2) pre-employment/pre-access hair testing to Company

sites/locations for Safety Sensitive Positions, 3) random testing, 4) for cause testing, 5) follow-up

testing, if the CONTRACTOR chooses to support the individual's rehabilitation (it being understood

that if the individual is not rehabilitated he/she will not be allowed back on any COMPANY

GROUP WORKSITE and the individual may only undergo rehabilitation one-time in order to

continue working on any COMPANY GROUP WORKSITE), and 6) ensured fitness-for-duty before

permitting personnel with identified substance abuse problems to return to work on Company

premises. If the applicable Business requires the DISA CONTRACTOR Consortium, CONTRACTOR

must participate in the DISA CONTRACTOR Consortium (unless there is a variance is in place),

which provides compliance with the substance abuse policy requirements.

The CONTRACTOR Substance Abuse guidelines and/or DISA Consortium guidelines should be

communicated to all CONTRACTOR Personnel. Additionally, CONTRACTOR supervision should be

trained on the requirements of: random testing notification, for cause testing, and stand down

procedures.

CONTRACTOR agrees that if personnel receive a fitness for duty concern from a Medical Review

Officer (MRO) following a drug test, the individual must receive medical clearance to perform the

essential job functions of the position prior to returning to the Worksite.

15.11 QUESTIONS

Questions regarding IQN should be directed to the Contractor Services Desk (CSD) (SBSC-

Contractor-Service-Desk@shell.com or +1-713-241-7010) or you may consult the Contractor

Service Desk website.

Questions regarding Background Screening should be directed to Shell Corporate Security.

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If you have additional questions, you may contact your HR Account Manager.