International Centre for Trade Union Rights

Rolls Royce: not the way gentlemen behave!Author(s): Tim WebbSource: International Union Rights, Vol. 1, No. 1, New threats for Russian labour (FIRSTQUARTER 1992), p. 29Published by: International Centre for Trade Union RightsStable URL: http://www.jstor.org/stable/41935269 .

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CASE STUDY □ UNITED KINGDOM

Rolls Royce:

not the way

gentlemen behave!

Rolls-Royce

manufacturer

and smaller

Pratt than

&

is

Whitney.

the

its in third

two the

main

largest

After

world US running

aero-engine but rivals,

much

into GE

manufacturer in the world but much smaller than its two main US rivals, GE and Pratt & Whitney. After running into

deep financial trouble, it was taken into public ownership in 1971 and privatised by the Thatcher government several years ago.

The world market for aerospace products has been in sharp decline for the past two years. This is due to a number of factors including reduc- tions in defence spending, the strong pound sterling against the dollar (all aerospace sales are priced in dollars) and the Gulf War. Some air- lines are near bankruptcy.

In January 1991, the company announced 3,000 redundancies. These were being negotiated when, on 8 May 1991, they announced a further 3,000 and a pay freeze. It was the method of implementing the latter that caused the shock that was picked up by the UK media and in many overseas countries.

The company sent a letter to all 34,000 employees at their home addresses telling them that if they did not accept a six-month pay freeze they would be dismissed. The company Personnel Director wrote: "You may accept the company s otter ot continued employ- ment (ie. with the pay freeze- TW) by simply reporting for work in the nor- mal way on your next working day fol- lowing the expiration of your notice. If for any reason you are unable to attend work on that day, you may accept by notifying your supervisor. If you do not indicate acceptance in one of these ways your employment will end in accordance with your notice".

Understandably, this caused con- siderable offence and worry to Rolls- Royce employees and their families. MSF and ACTSS held a joint meeting and the MSF lawyers were contacted. Advice was received that the company could be in breach of contract on two counts :- 1. Dismissal The national Engineering Industry Staff Procedure between the Engineering Employers' Federation and the engineering staff unions states in Clause 36:

"It is open to the dismissed person to call through the union for an external conference, and in such case the person will remain an employee of the company until such time as agreement is reached or the procedure is exhausted". This was not provided for in the company's action. 2. Pay Pay matters are dealt with at local level by site procedure agreements. There is no provision for national agreements or impositions of the kind the company was attempting by its letter.

For instance, in October 1990, the company had tabled a 9 per cent pay increase offer at site level. Shortly afterwards, it announced that its finan- cial situation was such that it could only afford 5% from October and proposed that the remain- ing 4 per cent should be paid from April 1991 - a six-month delay. After local negotiations, the union representatives accepted this.

No such effort to involve the unions through the agreed procedure was made by the company in May 1991. They were merely informed that the company intended to enforce the pay freeze on individual employees by letter.

As any action against the company for breach of contract had to be taken by individual employees, five MSF members swore affidavits in preparation for a High Court action. Senior counsel was engaged and the MSF National Officer wrote to the company demanding with- drawal of the letter otherwise proceedings would be commenced immediately. The union also demanded formally individual external confer- ences for each of its members threatened with dismissal.

After a rapid exchange of correspondence, the company proposed a meeting on 23 May,

the day betöre the action was due in the High Court. MSF was represented by the National Officer with the General Secretary of the Confederation of Shipbuilding and Engineering Unions (CSEU) as a wit- ness.

After four and a half hours of negotiations the company agreed to withdraw the letter and MSF agreed to drop its court action.

Subsequently, the company sent another letter to all employees with- drawing the first letter and apologis- ing for any distress caused to employ- ees and their families.

The case was important for all British trade unions as it demonstrated the need to protect our members' contracts of employment. In com- parison with their western European counter- parts, UK employees have little legal protection against dismissal and that which we have, we should guard carefully.

A great deal of attention was focused on the issue by employment lawyers, personnel man- agers and other unions. There is no doubt that if Rolls-Royce had succeeded, other employers would have swiftly followed suit.

As a postscript, it is worth noting that the company have got the pay freeze because it was discussed and negotiated in the normal way. They now consult fully with the trade unions on their staffing levels and business situation □

Weak UK laws leave employees open to harassment by ruthless

employers. Tim Webb

reports on a recent case which

highlighted the

problem

FIRST QUARTER 1992

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