Strike’s out!

Posted on 13 Jun 2011 by The Manufacturer

While it’s inevitable that in some instances industrial action will go ahead despite all feasible attempts to prevent it, in the vast majority of cases disputes can be settled between employer and employee without the need for union intervention. George Archer reports.

The juxtaposition between Unilever employees waving banners outside the Queen Elizabeth II Conference Centre and the smartly dressed Westminster dons on their way to the House of Parliament was profound.

Protesting against the closure of their final salary pension scheme, the Anglo-Dutch manufacturer’s workers were resorting to direct industrial action after the company announced its plans to move all members of its Final Salary Pension scheme over to a career average revalued earnings scheme – with the somewhat ironic acronym ‘care ’. Banners demanding ‘Hands off our pensions!’ and ‘Don’t wash our retirement plan down the drain – we deserve better!’ would suggest the employees might harbour some scepticism of the care they’ve been afforded by their employer in this particular scenario. One of the workers at the rally told The Manufacturer that he stands to lose out on around £70,000 if he lives for ten years after he retires.

Actions like the Unilever situation are becoming increasingly rare though, despite the myriad of redundancies and pay cuts that resulted from the recent recession. Law firm Pinsent Masons’ ‘Focus on industrial action’ report shows just 1% of private sector workers took part in any form of industrial action in the 12 months prior to being asked and 61% have never even belonged to a union.

Jenny Formby, national officer at the union Unite, points out: “The general perception is that unions like to initiate industrial action every five minutes, but this isn’t the case. Members prefer to avoid industrial action through mediation with the company.

Employees would much rather go to work than strike all the time.”

Yet when the threat of industrial action transpires into reality, the consequences can be severe. As well as any potential lost productivity, you could have a damaged reputation and a disassociated workforce on your hands. Heinz and Coca-Cola Enteprises are two companies who will have learnt a thing or two about that over the past twelve months.

CBI’s proposed reforms
In October last year, the Confederation of British Industry (CBI) proposed a raft of reforms to industrial action law. In his report ‘Keeping the wheels turning: modernising the legal framework of industrial relations’, Jim Bligh, the CBI’s principal policy advisor, argues that with strike action gradually decreasing over the past 20 years, manufacturers are expected by their customer base to continue to provide services and maintain output.

The working relationship between employer and employee has ‘grown up’, according to Bligh. The obstacles and challenges faced by companies are now clearer to their workers and proposed changes in terms of remuneration, processes and regulations are now seen in a better light. The CBI’s report on employment trends in Spring last year found that 87% of employers felt their employees “recognised the need to cut costs and change work patterns in response to economic pressures”.

When asked about the state of industrial action law, Bligh said: “We think an overhaul of law governing industrial action is long overdue, particularly given that only 15% of the workforce is represented by a trade union. Far too often strikes go ahead on a low [vote] turnout and we believe the bar should be set higher, so strikes require the backing of 40% of those balloted, as well as a simple majority.

The organisation has taken its proposals to the Government and is now waiting to hear whether Number 10 decides to act on them.

“It is clear that the mood is changing following recent transport strikes,” adds Bligh, “especially given recent comments from the Mayor of London and Dominic Raab MP proposed a parliamentary Bill to raise the threshold for strikes in emergency services.” Another of the reforms proposed by the CBI in the report was increasing the notice period which must be given to employers ahead of strike action from seven to fourteen days after the ballot takes place, in order to give the company more time to prepare.

But on this note, Ms Formby says a culture of better communication on employers’ behalf could prevent industrial action from occurring in the first place. With good dialogue between employer and employee, any widespread discontent within the workforce should surface quickly, and mediation could begin immediately, she points out.

The issue of agency workers is an important one for manufacturers, given that so many experience seasonal swings in business. However, there are differing views on the benefits and ethics of using temporary workers while industrial disputes are ongoing. Pinsent Masons said that employers are able to use employment agencies to supply workers and employ them to temporarily replace workers on strike, as long as they’re employed directly by the company and not by the agency supplying the workers. The CBI has proposed that this rule be changed so that businesses can quickly and easily minimise the impact of strikes.

Ms Formby argues that using agency workers to replace those that are on strike contributes to poor industrial relations within a company. “Instead of actually sitting down and talking to employees about their problems, worries and needs, employers can just fall back on agency workers and essentially forget about it,” she said.

Brendan Barber, general secretary of the Trade Unions Council (TUC) has labelled the CBI’s proposals as “a fundamental attack on basic rights at work that are recognised in every human rights charter”.

EEF cash plan
The industrial action at both Heinz and Coca-Cola Enterpises were both in part because the employees were unhappy about pay rise offers. Firms are not always in a position where they can buckle into wage demands of course. However, they may be able to offer fringe benefits to workers instead. In October last year, Leicestershire-based aerospace and defence precision engineer JJ Churchill was unable to offer its workforce of just over 100 a pay increase as asked for by its employees’ union representatives in the annual pay round negotiations.

Instead, managing director Andrew Churchill introduced the EEF Cash Plan, a scheme where for just £1 a week, an employee is covered for up to £55 a year for new glasses; £55 a year for dentistry; and is covered for any MRI, CT and PET scans they need, among other benefits. Employees can pay £2 a week and roughly double the amount they are covered for on an annual basis.

According to Churchill, introducing such a scheme was a huge factor in keeping employees at the firm content last October; “In the negotiations last year I was scrapping around for fringe benefits in response to a 7% pay rise request,” he says. “These benefits needed to be real and valuable – this plan is roughly ten times cheaper because it is in effect a bulk buy and therefore much more competitive.

As well as the EEF Cash Plan, there are other schemes being introduced for members of the trade organisation. The Advantages Programme includes a scheme whereby workers are encouraged to ride to work. The company buys bicycles for workers out of their pre-tax wage. “Straight away this is a substantial saving [for the workers] and I get happy, healthy employees,” said Churchill.

“Fringe benefits can be effective when small to medium enterprises are in competition with manufacturers that can afford to pay top percentile wages” he adds. “The key is to have a flexible, outside the box view about what things they can offer to their workforce.”

Specialist legal advice
While the press often draws attention to action taken by disgruntled workers, often in a distinctly negative light, cases like Unilever’s are something of a minority. Negotiations that do take place are often a lot more cordial than those reported on in the press and more often than not they don’t involve unions, as often only a part of the workforce is unionised.

Where union representatives are involved, Martin Warren, head of the human resources practice group at the law firm Eversheds, recommends a non-confrontational approach. “If you’ve inherited a union, then clearly you have got to manage that relationship with them, while generally looking to work in a collaborative way,” he said. “If you haven’t got a union, what makes for the best industrial relations is to have some sort of employee forum because you want them to understand why you are making certain decisions, why you are making changes and so on. If people get what you are doing, they will generally go along with the change.

It’s all about communication.” Warren reiterates that regular contact with your employees is essential if you want them to understand the challenges your business faces and accept the need for changes. He uses the example of a bank adapting to the work habits of customers.

As they have started to work longer hours, banks find themselves needing to accommodate this by opening for longer and at weekends. Springing these changes on employees and asking them to work weekends and evenings would most likely annoy them acutely. Good industrial relations require these changes to be outlined, explained and discussed.

Industrial disputes and action should be a very last resort for both employers and their employees.

As well as a damaging losses for plants and factories, workers usually end up out of pocket to some extent too. Firms that are serious about maintaining good industrial relations need to give thought to establishing and preserving channels of communication between themselves, their workers and the unions that represent them. Development of positive working relationships between management and the workforce is one of the most important initiatives for firms to undertake.