Telecom offers personal contracts to managers

Telecom Eireann, Ireland's state-owned telecommunications company, plans to introduce personal contracts of employment for 300 of its senior managers.

Telecom Eireann's plan to introduce personal contracts for 300 of its managers who report directly to senior executives must be seen in the context of the company's effort to implement a major programme of change to meet the requirements of EU-driven deregulation requirements. A Telecom redundancy package was also reactivated recently, one of several in recent years, as the company seeks to reduce costs. It is also to enter talks with the union representing general workers in Telecom, the Communications Workers Union, on a proposed IEP 110 million cost savings plan.

The current pay rates of the 300 managers concerned are related to the grades of assistant principal and principal officer in the Irish civil service, who currently earn maximum annual salaries of IEP 33,000 and IEP 41,000 respectively. Under the new initiative, they will voluntarily forgo collective trade union representation on pay matters and in future, their pay will be negotiated on an individual performance-related basis. The managers will retain their union membership, although the role of the union will become mainly advisory. The new contracts will include a "golden handcuff" clause, which will prevent the managers concerned from working for a rival company for between 12 to 24 months if they should decide to leave Telecom Eireann. The length of the "handcuff" restriction will depend on the sensitivity of the area that the particular individual may have worked in.

The new contracts are based on an independent report drawn up by an agreed third party - Kevin Heffernan, a former chair of the Labour Court. It is expected that the findings of Mr Heffernan's report will be put directly to the managers in the near future.

The managers will continue to be afforded the protection of 1983 legislation which established Telecom. This guarantees them job security and protects their conditions of employment. Under the legislation, the former Department of Posts and Telegraphs relinquished control of postal and telecommunications services and two commercial state companies were established - An Post and Telecom Eireann.

Recently, the Government approved a bid by the joint Dutch/Swedish consortium, KPN/Telia, to purchase a 20% stake in Telecom with an option to increase its stakeholding to 35% at a later stage. The Telecom-KPN/Telia "link-up" is aimed at developing the company's expertise and its ability to survive and grow in an increasingly competitive and strategically important industry.