DNEG, VFX Firm Behind ‘Dune’ & ‘Oppenheimer’, Asking Staff To Take 25% Pay Cuts Or Join Loan Scheme As Strikes Wreak Havoc

EXCLUSIVE: Just weeks after laying off dozens in its London HQ, DNEG, the company responsible for the VFX on movies such as Dune and Oppenheimer, is asking staff to take up to 25% pay cuts or join a loan scheme, as work slows to a standstill due to the strikes. Insiders believe their contracts will be terminated if they don’t agree to the measures.

DNEG’s plus-10,000 employees across the globe have been given a choice, sources say. They are being asked to take cuts of between 20% and 25% for seven months depending on salary (a higher percentage for those paid more) or, for those who can’t afford the cuts, they are being given a larger cut but then loaned back the majority, which they then pay back over three years. One source gave an example of taking a pay cut of 50% before being immediately loaned back 40%, payable with no interest over the longer 36-month period.

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Sources said both work out as losing roughly the same amount of salary over the period, with the 36-month loan scheme understood to lead to a salary reduction of circa-1-3% during that time.

The move will “enable us to maintain the maximum number of jobs through this period,” according to a lengthy DNEG statement sent to Deadline.

But unions and workers that we have spoken with have reacted angrily to the move and speed at which it has been imposed, with sources saying they have been given just 11 days to make a decision or they understand their contracts will be terminated.

In the UK, the Animation and VFX branch of broadcasting union Bectu is hosting an emergency Zoom meeting on Monday “for those affected by DNEGs enforced pay cuts and loan scheme to take action.” In a separate post, the union reminded members that it is “illegal to impose a paycut without consent.”

The pay cuts are similar to those imposed during the early months of the Covid-19 pandemic at multiple firms including DNEG, which an SEC filing from the time said was “primarily responsible” for savings of around $24.5M.

“Super pissed off”

One DNEG employee said workers who went through both the pandemic and this latest strife at the VFX firm are “super pissed off.” “We feel like DNEG is not offering anything to compensate but are instead pushing all the weight and risk on the employee,” added the source.

Another accused DNEG of “exploiting workers,” adding: “We can’t simply boil this all down to ‘tough times’.”

Bectu Head Philippa Childs said “workers should not disproportionately bear the brunt” of the strikes and economic crisis, as she “encouraged DNEG to engage with us to ensure that their employees’ concerns are heard.”

In July, Deadline revealed that the VFX firm was laying off around 7.5% of its London HQ workforce – amounting to approximately 70 people. The company has offices in London, LA, Vancouver, Mumbai, Chennai, Montreal, Bangalore, Toronto and Sydney.

DNEG’s latest full-year results for the year to March 31, 2022 saw revenues shoot upwards by 33% to $409M, with adjusted EBITDA topping the $100M mark, but the economic situation has changed significantly since then and DNEG is yet to post its full-year 2023 results. The dual strikes have led to a colossal loss of work for multiple VFX firms.

A DNEG spokesman acknowledged the “concern and uncertainty among our valued teams and community,” and said the company wants to “address the changes directly and honestly.”

“All of us at DNEG are keenly aware of the tremendous challenges facing the feature film and television industries at the moment, and the visual effects and animation studios that support them have been forced to confront those challenges,” added the statement.

“DNEG is not immune to the impact of the current industry disruption, and we are not alone. These challenges are impacting all filmmaking departments, and our global clients are facing suspension or postponements of projects that represent meaningful revenue to all companies and professionals working in this industry. As a result, we are continuously and proactively reviewing all areas of our business to ensure that we can continue to deliver the highest quality work while protecting as many of our employees’ positions as possible. In order to do that, we’ve asked all employees and team members, including the most senior executives and creative leaders, to assume short-term pay cuts that will enable us to maintain the maximum number of jobs through this period.”

“This is not a decision we have made lightly,” the statement went on to say.

“We’ve tried to propose solutions that sustain jobs, keep as much money as possible in our employees’ pockets during this difficult period, and position the company to meet the current economic challenges. The proposal we have put forward – after a great deal of consideration and scrutiny – is what we believe to be the best path available to us at this time, and is intended to minimize the impact on our community of employees and avoid having to significantly reduce our workforce. These measures are intended to help us navigate the current challenges so that we can all emerge stronger and better prepared for the future, once this disruption passes.”

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