Thomson Reuters
Job losses at specific sites have yet to be confirmed
The company said the move was part of a two year recovery programme. Npower lost 351,000 customers in 2015, along with €137 million (£106 million; $151 million), compared with €227 million (£176 million; $250 million) profit in 2014.
The BBC reports that Npower has been "plagued by customer complaints over billing and in December was fined, by the energy's industry regulator, a record £26 million (£37 million) for those problems.
Up until now Npower had 7,500 direct (rather than outsourced) workers in the UK. Although it is unclear how many British sites will incur job losses, the company said that it would keep its three main power stations around the Midlands and north-east England would be safe from redundancies.
The company's chief executive Paul Coffey admitted the move was disappointing but necessary after a terrible 2015, saying Npower was "a business that tried to do too much, too soon while not focusing enough on the fundamentals in a constantly changing market."
He went on to say that by 2018 "around 2,400 fewer people will support npower overall through a mix of those who work directly and indirectly for Npower [but] I am convinced that these steps are critical to protect the thousands of jobs that will remain."
Workers unions reacted angrily to move, saying it would devastate communities across the country.
"Npower's German owner isn't terribly committed to its UK operations. Cutting a fifth of the workforce will leave the already struggling business in an even worse state. Now months of uncertainly lie ahead for a workforce whose morale is already at rock bottom, " Unison Secretary Dave Prentis said.
Npower is owned by Rheinisch-Westfälische Elektrizitätswerke (RWE), based in Essen, Germany. Its share price was €11.19 (£8.67; $12.32) as of 11am on Tuesday, down from €24.35 (£18.85; $26.81) a year ago.