Aer Lingus proposes industrial relations framework in light of privatisation

A draft company–employee framework document has been tabled by state-owned Aer Lingus management, setting out in detail the industrial relations framework that it would like to see agreed with the trade unions in conjunction with the forthcoming privatisation of the company.

Aer Lingus has drafted a detailed industrial relations framework agreement that it wants to agree with the trade unions prior to moving ahead with an initial public offering (IPO); the government decided, in April 2006, that privatisation represented the best option for the airline to go forward. The agreement, entitled ‘Company–Employee framework document agreed in conjunction with IPO – 2006’, was leaked to the Irish Times on Tuesday 9 May 2006 and was quoted extensively in Industrial Relations News (IRN) on 11 May.

In April, the government announced that it is to sell up to 60% of the airline, retaining ‘at least 25.1%’. Exactly 14.9% is currently held in an employee share ownership plan (ESOP).

Proposed agreement

The draft document covers a range of key industrial relations areas such as: job security; flexibility requirements; security of earnings; trade union organisation and membership; protection of conditions; new pension arrangements; and avoiding dilution of ESOP after the IPO.

Some of the provisions are likely to be controversial, such as a proposed new defined contribution pension for new employees and proposals for dealing with outstanding pay claims. The plan also suggests that a supplementary fund should be set up to address the deficit in the general pension scheme. This would require €70 million from the sale proceeds, while employer and employee contributions would be increased by an additional 3%.

The Irish Municipal Public and Civil Trade Union (IMPACT) has already warned that introducing a defined contribution scheme for new entrants is a ‘no go’ area, a concern shared by the largest union represented in Aer Lingus, the Services Industrial Professional and Technical Union (SIPTU).

Both unions will also closely study the proposals on trade union organisation and membership, which suggest that each category of worker should, in future, belong to just one union. This may be an effort to avoid any future transfer of members, as occurred when a majority of cabin crew left SIPTU for IMPACT in 2000.

The draft agreement does not, however, directly address the controversy that arose in July 2005 over the human resources (HR) so-called ‘push factors’ strategy document of 2004, which was put forward within the HR department as a possible means of encouraging staff to leave the company. Although it was never acted on, this document angered the trade unions and sparked a political furore (IE0509201N). References were made in the document to work environmental ‘push factors’ being like a ‘tap on the shoulder’ and a suggestion that a change of uniform for flight attendants could act as a ‘pressure point’ in the context of the company’s business plan.

‘Culture of adherence’

The draft agreement drawn up by management proposes that the parties should commit to the ‘establishment of a culture of adherence to procedures by which any issues arising from the relationships between the company, the unions and the employees can be resolved effectively and speedily by means of consultation, negotiation, conciliation and, where necessary, binding arbitration’.

The document notes that as ‘seasonality and cyclicality are ever-present aspects of the aviation industry’, these factors ‘must be reflected in our resourcing strategies’. This will drive a requirement for seasonal jobs in the majority of operating areas.

Full flexibility and mobility of workers are also needed and employees must respond ‘positively and flexibly’ to changes to their working patterns driven by operational and schedule requirements. The document warns that proven abuse of the sick benefit scheme will be treated as ‘gross misconduct’.

Security of earnings

The company will endeavour to guarantee work for employees during the basic working hours of each week: ‘In the event of work not being available for the whole or part of those hours, employees will be paid their salary for the basic hours for the duration of any period of non-availability of work, for up to six weeks in any rolling 12-month period, provided a number of conditions are met.’

On job security, the company will ‘to the extent that same is possible, and with the cooperation of the signatory trade unions and employees, address any … staff surplus by way of redeployment, transfer and/or voluntary redundancies, rather than by way of compulsory redundancies.’

Trade union organisation

The document states that the company recognises the responsibility of the signatory trade unions to represent the interest of their members and ‘the signatory unions recognise the responsibility of the management to plan, organise, manage and decide finally upon the operations.’ The document affirms that the company recognises the right of employees to join a union.

The draft document also states that the company: ‘recognises to the exclusion of all others the unions signatory to this agreement as having representation and negotiation rights in relation to the employees. It should be noted that, in the longer term, it is the company’s aspiration that each employee group is represented by a single trade union.’

The document states that the company will encourage the employees to be members of a signatory union appropriate to their grade/position. At the same time, neither the company nor any of the unions will discriminate against any employee who chooses not to belong to any of the unions.

Brian Sheehan, IRN Publishing