Employer relationships with unions can reduce risk of industrial action

Anyone who has ever been caught up in the midst of a transport strike will know how disruptive industrial action can be. Yet, many workers believe they are only able to get their point across by taking such steps. In the last few months, London Underground staff, for example, have used the threat of bringing the capital’s tube network to a standstill in a dispute over pension arrangements and conditions for Metronet staff who are being transferred to Transport for London. Thousands of Network Rail staff, meanwhile, threatened to walk out in a dispute over pay and conditions.

The first national teachers’ strike in 21 years also took place last month, as many members of the National Union of Teachers walked out in protest at their 2.45% pay offer. The union claims this is below the current rate of inflation, as the retail price index, which is commonly used for pay bargaining, is currently running at a yearly average of 4.1%.

Industrial action can have such costly consequences that senior management of heavily-unionised organisations must glance nervously at their staff and pray they are not next. As Employee Benefits went to press, bosses at Ineos oil refinery in Grangemouth, Scotland were set to experience this firsthand as 1,200 workers were preparing to go on a two-day strike in protest at the company’s plans to close its final salary pension scheme to new members and reduce contributions to the scheme, which were brought in despite a six-month long consultation period with members. Due to health and safety requirements, the plant was already being shut down in preparation for strike. It is estimated that it will take at least a month to bring it back up to full capacity.

But not all disputes need to end in a strike. There are a number of steps employers can take to build a more harmonious relationship with unions. Utilising the knowledge of benefits staff, who are closest to some of the classic areas of contention could be key to smoother relations.

As compensation and benefit teams have the greatest knowledge of the perks on offer, and understand why changes may be necessary, it is important they maintain a dialogue with union representatives. Ed Smithson, a senior consultant in the employee benefits division of Truestone Asset Management, says: “Lack of understanding often leads to confrontation and refusal to accept proposals, so there is a huge role for benefit managers to play.”

Many unions agree that by maintaining honest communication between the two parties, changes to crucial benefits will not come as such a shock. Paul Nowak, national organiser at the Trades Union Congress, says: “Too often, HR is seen as a soft function, but the way you treat and motivate staff through benefits is at the heart of any organisation. HR people need to be involved in all employer and union discussions.”

Such communication needs to take place on a regular basis. All too often, it is only conducted annually, but if this is increased to a monthly basis, for instance, eventually employees and employers alike will have access to a constant flow of information.

Even if all attempts at communication and negotiation fail and staff walk out bringing the organisation to a standstill, there are still steps employers can take to minimise the length of the strike. At this point, it is crucial employers maintain communication with staff to try to resolve the issue as quickly as possible.

If unions are equipped with a good understanding of benefits, they may be less likely to react badly when proposals are made to change them. This is especially the case in relation to pensions, explains Charlie Carrick, divisional director at Orbit Benefits. “Rather than just sending out pension statements once a year, do it regularly, as and when changes occur. This way it isn’t going to be a shock to unions when changes are enforced,” he says.

Modelling tools

At times of change, compensation and benefits professionals can help to communicate the reasons behind any benefits proposals. Tools such as online calculators can help staff to assess their current pension pot and forecast their pension fund on retirement, while financial education sessions, which can either be online or face-to-face, will help unionised workforces to understand the benefits they have as well as the reasons why changes are proposed.

In many cases, when change is necessary staff will be offered an alternative perk, so it is important this is made clear. If a union has little knowledge about pensions, for example, its knee-jerk reaction to news of the closure of a final salary scheme may be to protest. If the organisation is able to explain the reasons for an alternative arrangement, such as a new defined contribution (DC) scheme, there is a good chance unions will not react so badly.

“Pension managers and other HR professionals have a big role to play here. They should be accentuating the positive, [including other elements of the] total reward [package],” explains Carrick.

Smithson agrees that if unions understand the financial strain that running a perk like a final salary pension can put on an organisation, its members may be willing to discuss alternative options as opposed to rushing to strike. “If it gets to the point where [workers and management] have not communicated over benefits whatsoever, and then suddenly the employer decides to pull a scheme, the union is bound to be up in arms. Unions need to understand that, in extreme circumstances, pensions [provision] can make or break organisations,” he says.

In many instances, therefore, benefits professionals can help their organisation to pre-empt periods of employee and union unrest by developing and maintaining a close relationship with union representatives at a local level, as well as on a national scale. “It is important to build a day-to-day relationship with unions, and that involves dealing with local union representatives,” explains Nowak.

Local relationships

Each union will have employees that represent it on different matters, so, by taking the time to build a solid relationship locally with individual representatives or with a team of union members who deal with issues around pay and pensions, benefits teams may find that problems can be resolved more easily.

“Resolving disputes is a lot easier where there has been a strong relationship between the employer and the union. It is the compensation and benefits-type staff that can build these relationships [locally],” adds Nowak.

Some organisations also use local union representatives to help iron out any issues before they become major problems. Humberside Police, for example, treats local union representatives as a source of information for the organisation, as they can raise any problems, rather than leaving them to fester.

John Robinson, employee relations manager at Humberside Police, says: “We want local union representatives to be the eyes and the ears of the main union, so we have a good network of managers that know union members well. We like to resolve problems locally, not on a national scale.” EB

Tips on union liaison

  • Create strong links between HR and unions It is important that those who are most knowledgeable about, and closest to, benefits are involved in communicating with unions, particularly around contentious issues such as pensions or pay.
  • Undertake regular communication Organisations which say they communicate with staff but only send them statements detailing pay, pensions and other perks once a year, should consider providing information more frequently. Regular communication with unions will ensure there are no nasty shocks when benefits are changed.
  • Educate union members about benefits Understanding more complex and contentious perks will help unions to accept why alterations are being made to schemes. If a final salary pension scheme is pulled, for example, an informed union is far more likely to accept it and see the benefits of an alternative scheme, than one that has little knowledge of what a final salary scheme is or how much it costs the employer.
  • Use tools to help unions understand perks Pensions calculators, face-to-face or online financial education, or even information packs that are sent to employees’ homes can help union members to better understand their benefits packages.

Case study

Police get two-way communication with union

Humberside Police tries hard to build a solid relationship with Unison, the trade union that represents the majority of police staff within the UK.

Instead of approaching Unison with a them-and-us attitude, Humberside Police makes managers available for Unison representatives to discuss issues around levels of pay or pension benefits, and acknowledges the role the union plays.

Humberside Police even accommodates the union’s representatives by offering them office space to conduct their day-to-day work. John Robinson, employee relations manager, says: “We set [union] representatives up with desks and office space. We try to look after them.” By maintaining this contact and allowing the union to become involved in local government pension and pay alterations, the level of animosity between the union and management is kept to a minimum.

Robinson adds: “The union has a fair amount of power nationally, and we don’t expect [it] to just accept changes [to benefits such as pay and pensions]. They send their own representatives to discuss the changes.”