If an individual or small group of employees wants better pay, healthcare or changes to other terms of employment, they may highlight this to you, their employer. But how seriously will you take their request (barring the nature of the request being as a result of criminal or discriminatory behaviour), if you don’t see the merit in doing so? After all, who doesn’t want better employment terms…?
If you are simply dealing with an individual, you may elect to not act on the request. Often this may be due to a reluctance to set a precedent that may radiate from this action to others who feel they have an equally valid claim or a worry that this may be seen as discriminatory behaviour which may sow discord in the ranks.
But what if the request is made from a larger group of employees – or through its trade union? Often with larger numbers comes greater leverage. With greater leverage, often comes negotiating power.
There are occasions when organisations will consider the collective bargaining approach by its employees as a daunting prospect, one which carries with it the possibility of a dispute or your management team being forced into a corner.
For those of us ‘young’ enough to remember the employment strife of the 1980s, with its walkouts and picketing so often used as ‘negotiating’ tactics, this feeling is certainly understandable. But it doesn’t have to be that way. Any time you have an opportunity to discuss your relationship with your employees en masse, it’s an opportunity to make improvements for both sides.
This article discusses the concept of collective bargaining, what it is, how it works and the chance for change, which if approached correctly, could positively reset relationships and put them on a better path.
What is collective bargaining?
The term “collective bargaining“ was first used in 1891 by Beatrice Webb. It is a negotiation process undertaken between a group of employees – often represented by a trade union – and their employers with the goal of achieving agreement on improvements in such matters as salaries and benefits, working conditions and workers’ rights.
Trade unions may negotiate with a single employer or a group of companies, representing individuals in an organisation or across an industry, in order to attempt to establish a collective bargaining agreement (CBA) or collective employment agreement (CEA). The aim is essentially to use the power of employee numbers and other leverage to negotiate improvements in employment terms, transfer (TUPE) terms or settlement agreements.
The power of employee numbers is magnified with the introduction of a union into the process. The trade union body will not only represent far more workers than exist in any single organisation, they often have skilled negotiators well versed in the process who can be deployed into action. While collective bargaining is not inherent in English law as it is in the USA, if a UK employer agrees to it, then the process must be followed. This was outlined in a recent English court judgment.
Of course, neither side is ‘required’ to agree to the proposals of the other. However, this should be seen, by both sides, as a realignment exercise, one where a fair and amicable agreement can be found.
Making collective bargaining work well
There are 3 steps to consider to achieve success:
Step 1: The dangers of success
The downside of overzealous bargaining from the union side is that even if they get what they are asking for, the economics may (and often will) trigger a shift from the employer side towards (a) outsourcing of the service in an attempt to drive perceived better value and service cost reductions and/or (b) greater automation and technological investment to improve efficiencies and lessen the employer’s dependency on the size of workforce they have.
There are certainly many examples of such negotiations undertaken by trade unions being perceived as ‘successful’ that have later reportedly resulted in the same employers downsizing and making significant redundancies in their workforce, putting many of those individuals who fought for their collective bargaining rights, out into the cold.
So ‘fairness’ is a vital part of any negotiations, an appreciation for what is the employee’s right alongside what the employer can legitimately be expected to agree to before it is forced into additional commercial decisions which may affect the workforce going forward in a negative way. It’s a fine balancing act, but at its core is the simple concept of ‘fairness’.
Step 2: The collective bargaining time frame
Collective bargaining can be a lengthy process as often a complex tapestry of demands and requests will need to be discussed – from the headline issues of salaries, pensions and working conditions to more micro matters such as break times.
Talks may go on for months and there is a need for give and take on both sides. It is, therefore, important to understand and quantify what specific aspects of your organisation will improve, by what percentage and by when, if you give the employees what they are asking for.
Likewise, you should run different financial and operating simulation models on the impact to your organisation, aligned to the different scenarios of employee requests. It’s important that both sides should prepare well before they sit down with one another, having run through the various requests and their impact on the organisation.
An appreciation is needed for what is requested and why, as well as who is on each side’s negotiating team. If you are able to place their wish list of demands in order of preference to them and order of beneficial impact to you, it is usually possible to find a solution fairly rapidly.
Be mindful of the fact that the longer any misalignment of a solution to the requests continue, the greater the negative impact on both your organisation and the emotional uncertainty of the employees – in cost and reputation for you the employer, and stress for your employees – therefore, expedience rather than haste, is recommended.
Step 3: Getting past the sticking points
Successful negotiation involves not just what everyone’s underlying interests are, but how solutions to each request are presented and the order they are presented in. Some topics are more important than others to your employees, and some are more emotive or controversial, so each needs to be handled carefully or the process could be derailed, delaying a return to business as usual and greater emotional certainty for the employees.
There will always be core issues that both sides will see as very important, sticking points which could hold up the process and cause ongoing friction. It is the responsibility of the negotiators on both sides to find innovative solutions if they find themselves at loggerheads.
Sometimes this will mean one party getting what they want in a different form. Other times, it may mean ‘sweetening the pot’ by compromising on another issue to move forward. As representatives of greater entities, negotiators will have to ask the right questions of one another to correctly identify the underlying interests of both sides, and then work towards resolving those underlying interests.
If this is achieved successfully, it is a win-win for both parties. What often prevents such a solution is the interplay of ego, perception and expectations. Therefore, to build trust, all facts discussed must remain unbiased and objective.
While complex, time-consuming and potentially costly, the collective bargaining process is not something that should be sidestepped. You need to take the lead by evidencing good and unbiased behaviour to your employees (and their union representatives), which in turn, builds trust between you all. The process should be embraced and optimised to continue to earn the trust of your workforce and avoid the fallout that protracted or failed negotiations may result in.
Some employers have considered an alternative solution: to avoid collective bargaining altogether by simply outsourcing the staff, or their roles, to third-party suppliers. However, this may cause even greater issues down the line, as presented below using Qantas as a case study in this matter.
Case study: Qantas, ‘The Flying Kangaroo’
Founded in 1920, Qantas is one of the world’s oldest running airlines. It is Australia’s largest carrier, and one of the world’s safest as it’s often said that Qantas has never lost a jet airliner. While this is true (as far as we can tell), there have been accidents, though thankfully, no recent ones have resulted in loss of life.
Qantas vs unions
Ten years ago, Qantas grounded its entire fleet in response to disputes that had dragged on for around a year over negotiations with three unions. Industrial action over pay and working conditions had already cost the company a reported sum of AU$68m.
Though the grounding lasted just over two days, it still cost Qantas tens of millions and scared the Australian government into unilaterally ordering the termination of all action by all parties. While the unions didn’t get what they wanted, as in late 2012 their demands were rejected in federal court, the disruption cost Qantas dearly.
At the end of last year, the relationships became frosty again between unions and Qantas when the airline dismissed 2,000 baggage handlers, ramp workers and cabin cleaning staff. Qantas had outsourced their roles to subcontractors such as Swissport and dnata.
The Transport Workers Union (TWU) took this as a call to arms and a legal case ensued. The TWU claimed that Qantas had discarded these workers to prevent them from collectively bargaining for better working terms, something likely to be triggered by the expiration of their workplace agreement last month.
“The judgment made clear that Qantas targeted its ground workers for outsourcing because they were united to fight for decent standards at the airline,” said Michael Kaine, TWU national secretary.
Qantas on the other hand, claimed that their outsourcing move was based on financial prudence given the airline industry’s decimation of revenues, in part due to Covid restrictions. It was stated that outsourcing to specialist ground handlers would potentially save them AU$100m a year. Qantas stated this was a management decision it desperately needed to action, due to the Australian government’s stance on the Covid-19 pandemic seriously limiting their revenues and cash flow over the last two years.
However, according to Supply Management magazine, “The Australian Federal Court found Qantas’ decision to dismiss workers and hire subcontractors was driven partially to prevent workers from demanding better wages and taking industrial action.”
Be careful what you wish for
The TWU had hoped that it would be able to get most of the 2,000 dismissed workers their jobs back. This hope was crushed last month when the courts agreed that compensation and penalties were under consideration, but the complexity and impracticality of reinstatement of employees, meant that the court would not be allowing for it. The TWU has stated that it will be appealing this decision.
Conclusion
What is clear from this court case, is that it pays for employers to be fair and equitable with their employees. While unions are in place to help prevent employees being unfairly taken advantage of, it’s important that employer organisations are able to operate profitably and invest into their organisations to remain competitive.
Where organisations have decided to adopt collective bargaining, they need to manage the process properly and make the most of the opportunity. Simply following an outsourcing path as a sidestepping tactic is likely to cause more problems than it looks to solve.
Consider the following two fundamental outcomes of such a decision:
- The legal outcome. If you perceive your own organisation is not being transparent and fair, possibly using outsourcing as a ‘threat’ to try to improve its position, think of the Qantas case and the results of having to go to court. Then rethink and encourage the management team to take a more constructive approach.
- The relational breakdown outcome. Because an unhappy workforce is not a workforce motivated to achieve productivity targets, uphold quality standards or invest time in value-adding innovation, it may well (and usually does) result in higher staff churn. If you do outsource, any supplier you choose to inherit this sort of problem and may also in turn be less inclined to deliver at their best.
Essentially this is the very definition of a lose-lose move.
When it comes to collective bargaining, you should consider it to be a function of any commercial relationship, a process by which employees are able to achieve their own goals within the employment framework. Use it as an opportunity to further the commercial trust between you and your staff and to negotiate changes that benefit both sides to build a stronger organisation.
If you are looking for some guidance on the effective management of a collective bargaining process in order to maximise the opportunities inherent in these negotiations, then contact us on 0845 345 0130 or email advice@bestpracticegroup.com.
