Industrial disputes at Tesco Hungary

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2010 has been a successful year for Tesco Hungary’s business results, but the company has had to deal with a number of industrial disputes. The Independent Union of Retail Workers (KDFSZ) intends to ask the labour courts to make Tesco pay the same wages in all its stores. The National Labour Inspectorate is investigating KDFSZ’s complaints that Tesco cashiers are not paid the minimum wage, while the company says cashiers are not skilled and so are not entitled to the minimum wage.

Background

The turnover of Tesco Group increased by 8.5% worldwide in the fiscal year 2009–2010 and its Hungarian affiliates were equally successful. According to market research company, Nielsen, Tesco led Hungary’s market for retail food sellers in 2009, generating revenue of HUF 638.8 billion (about €2.3 billion as of 11 March 2010) across its 176 stores. The company was able to maintain its lead over competitors in Hungary in spite of the economic crisis. At the same time, Tesco has been less successful in managing industrial relations and has faced a series of disputes with trade unions.

Equal pay dispute

In spring 2010, the Independent Union of Retail Workers (KDFSZ) announced its intention to approach all the labour courts in Hungary in places where Tesco supermarkets are located to press the UK retailer to pay equal wages. Csaba Bubenkó, President of KDFSZ, said the wages of Tesco employees with the same contracts and performing the same job could differ by 10, 20 or even 30%, depending on the location of the store. He added that Tesco pays less in regions where the unemployment rate is higher, thus saving at least HUF 1 billion (€3.7 million)) a year. Mr Bubenkó insists the company should pay the same wage for the employees wherever the store is located. ‘Same wage for same work’ is a fundamental right which is being violated by the UK retailer, says the KDFSZ leader. He illustrated the situation with his own example: as a security coordinator his monthly wage is HUF 127,000 (€466)), while one of his colleagues doing the same job but living 300 kilometres from Budapest earns HUF 102,000 (€374)). He added that more than a hundred workers had complained about unequal wages.

The KDFSZ leader says that the situation began to deteriorate around 2000. Until then, the wages at Tesco were very competitive throughout the entire domestic market. At that time, it was considered attractive working for Tesco. Today, wages differ from region to region and employees are unhappy about the inequality.

Tesco’s explanation of this business practice is that, according to international and national practice, the concept of ‘the same pay for the same job’ holds only within individual stores, as a company like Tesco has to be competitive in local and regional labour markets.

According to Mr Bubenkó, his union had asked for advice from the Equal Treatment Authority (Egyenlő Bánásmód Hatóság) but had so far received no reply. The union will wait to hear its recommendations before turning to the courts.

Dismissal of two unionists

In June 2010, Tesco Global Áruházak Zrt. terminated the employment contracts of two of its employees’ with extraordinary notice. The two employees are Csaba Bubenkó and László Ivony, both leading officials of KDFSZ. The two unionists had persuaded a Tesco employee and his family to report a serious accident (resulting in injuries) in a way that would allow for the highest possible compensation.

According to the company, the unionists put pressure on the employee and his family in an ‘unethical and dishonest manner’. Tesco maintains that this amounts to a serious infringement of the relationship with the employer, rendering their future employment impossible. Their behaviour ‘violated good faith and respectability’, the company said, making the dismissals inevitable even though they are elected union leaders.

Csaba Bubenkó claims they are being punished for informing the employee about his rights and compensation possibilities. Istvan Gaskó, President of the Democratic League of Independent Trade Unions (LIGA) warned that dismissals with extraordinary notice against the president and another official of a union were against Hungarian and international labour regulations.

Mr Gaskó emphasised that, according to the Hungarian Labour Code, if an employer plans the immediate dismissal of a unionist or a trade union official, they must first consult the trade union or the federation, but Tesco failed to consult LIGA.

Csaba Bubenkó added that extraordinary notices of dismissal have been given to four unionists in a six-month period. All unionists who lost their jobs in this way have taken up charges against Tesco before the labour courts, but none of the processes has begun. The union said that some of the officials had been dismissed in March 2010 but the first hearing was only expected to take place in January 2011.

Minimum wage and overtime debates

The latest debate was again sparked by Csaba Bubenkó, raising the question of why Tesco cashiers do not receive the minimum wage. According to the union, the employees concerned earn HUF 80,000–HUF 88,000 (€294–€323) depending on the location of the store, and the minimum monthly wage for skilled labour in Hungary is HUF 89,500 (€329). In addition, the union alleges the company fails to pay some allowances (for example, overtime, rest time) to the employees.

In response to these complaints, the Hungarian National Labour Inspectorate (OMMF) has begun to investigate the company’s practice in terms of payments for cashiers. Tesco argues that current legislation does not require cashiers to be classed as skilled employees, and this means that the higher minimum wage is not applicable. The company says it follows guidelines (in Hungarian, 262Kb MS Word document) issued by the Hungarian Trade Association (OKSZ), according to which cashiers are not considered skilled workers.

József Sáling, President of the Trade Union of Commercial Employees (KASZ), concurred with the complaints made by KDFSZ. The problem, according to him, is that the job classification of cashiers has not been resolved; the former Minister of Labour had promised KASZ in a letter that cashiers would be classified as skilled workers, but the Minister of Economy had taken a different interpretation. The trade unions now expect the new government to solve this issue but no official announcement has yet been made. József Sáling added that ‘a cashier’s job is a profession with responsibility’ and that solving this problem is urgent.

Following a public complaint by Mr Bubenkó that Tesco had failed to pay some HUF 365 million (€1.34 million) in allowances and bonuses for overtime work, the Pest Country Prosecutor’s Office has ordered an investigation into the retailer’s alleged failure to pay.

Judit Csató-Iglódi, a spokeswoman for Tesco, admitted there were problems with the software application used for payroll calculation which had resulted in some unpaid allowances, but she added that the problem had now been fixed and that everyone will be paid.

Commentary

Multinational companies play a vital role in the Hungarian economy and especially the retail sector is dominated by them. In most of the supermarket chains, employees are not unionised and collective agreements are rare. This makes it difficult for workers in the retail sector and the trade unions representing them to negotiate. Employers are largely uninterested and uncooperative. In 2008, KASZ managed to conclude an agreement with German retailer chain, Penny Market, but there has not been a similar initiative since. This is especially problematic because the retail sector is one of the largest employers in the country.

Komiljovics Máté, Solution4.org

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