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Employee Relations, Trade Union Recognition

Free essay example:

Employee Relations

Assignment One: Trade Union Recognition Process and Partnership in the workplace based on the ‘Vertex’ Case Study

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List of contents:

  1. Introduction
  2. The Process of Trade Union Recognition
  3. Advantages and disadvantages of Trade Union recognition
  4. Trade Union recognition at Vertex
  5. The elements of partnership in employee relations.
  6. Advantages and Disadvantages of Partnership in Employee Relations
  7. Indicators of success in Vertex
  8. Conclusion
  1. Introduction

This study investigates the process of trade union recognition in Vertex, a leading UK provider of outsourced business services and technology solutions with expertise in customer management, and identifies the main characteristics of partnership in employee relations. Report itself will be divided into two separate sections; first one will examine the recognition process with its advantages and disadvantages. It will also analyse the management rationale to firstly derecognise and then recognise the trade union. Second part will focus on partnership and the outcomes of this alliance. It will also try to evaluate whether the partnership with trade union was a success and if yes, why. Report will be based on employment relations books with authors including Ed Rose, Graham Hollinshead and Peter Nicholls as well as numerous publications from the World Wide Web. The information from government bodies like ACAS or BERR (Department for Business, Enterprise and Regulatory Reform) was also very valuable and useful.

  1. The Process of Trade Union Recognition

According to many sources, including trade unions and government bodies, trade union recognition process can be either voluntary or statutory.  Traditionally recognition of a union by an employer was purely a voluntary decision (Hollinshead, Nicholls, Tailby, 2003). It is also the most common form of trade union recognition (Business Link, 2007). In practice this means that the employer, without any legal actions undertaken by trade union, decides to recognise the trade union as a representative body of its employees. Sometimes the employers’ unwillingness and reluctance to recognise the union is so immense that union representatives, relying on Schedule A1 of the Trade Union and Labour Relations (Consolidation) Act 1992, decide to demand the statutory recognition. ACAS (Advisory, Conciliation and Arbitration Service) can provide impartial information and advice on a variety of trade union and associated issues and can fulfil a supportive role, for example in cases of voluntary union recognition, if both parties agree. In situations where such an agreement can’t be reached both parties can ask ACAS for help and use statutory recognition process to resolve the dispute. ACAS is allowed to organise a workforce ballot and then make recommendations for recognition. Failure to follow an ACAS recommendation could lead to a referral to the CAC who could then make an award on the terms and conditions that might have been negotiated if those negotiations had take place (Sargeant, Lewis, 2006). The statutory recognition covers employers with more than 20 workers and is very long, complex and with many stages. The process must begin with the written request to the employer by the trade union seeking recognition. The core elements are: formal request for recognition, employer’s response, CAC responsibilities, recognition declared and failure to agree (Hollinshead, Nicholls, Tailby, 2003). Both ACAS and the CAC are anxious for statutory recognition cases to be settled voluntarily wherever possible ­ and the CAC is required to promote voluntary settlements. Parties to statutory recognition cases are therefore encouraged to seek ACAS involvement whenever this could be helpful (ACAS, 2007).

  1. Advantages and disadvantages of Trade Union recognition

Complexity and time consumption of recognition process may discourage some employers from an attempt to build a healthy relationship with trade unions but that coalition can sometimes be very beneficial to the company. It can act as a focus for communication and consultation but it also imposes obligations and responsibilities on the employer. One of the major advantages of unionisation is definitely having a single body that represents employees. It is much easier for employers to arrange a meeting with union representatives rather than with every employee. This structured way of representing employees can also help to filter out the unrepresentative views and it is a tremendous facilitation in negotiations. The cost effectiveness, where the communication with the employees is concerned, is another reason for the businesses to consider recognising the trade union.  

Employee involvement and better organisational performance can be seen as a next major advantage. Union recognition encourages people to feel closer within the company, mainly because they’re able to discuss their pay or conditions through their union. Not only it increases their morale but also creates an ‘invisible relation’ where workforce is more motivated and ready for a greater commitment. The company’s performance and the quality of decisions may be improved by providing input from workers with relevant knowledge and skills. All of the above factors help to increase the performance, productivity and overall effectiveness of the organisation.

Although trade unions can be very beneficial to the company they can also have a very detrimental effect on the business.  One of the disadvantages according to some of the opponents is the inability of the trade unions to change. If it’s a minor change the resistance can be weak, but in more important issues, fe. extending working hours or reducing the pay, union members can take industrial actions to show their anxiety. Public sector is highly exposed to strikes that usually cause a massive inconvenience for vast majority of the society. Industries including transport or health service (NHS) could pose a huge threat to the welfare of the people if stopped functioning. That’s why government always tries to step in and takes the necessary actions to help to avoid strikes. Some union critics also argue from a pro-free-market perspective that labour is a commodity, and unions essentially operate by cartelizing labour, forming a monopoly on the commodity. They argue this monopoly on labour has the same negative effects as any other monopoly.

  1. Trade Union recognition at Vertex

Vertex was created in 1996 as a subsidiary when North West Water and North West Electricity (NORWEB) merged together. As a part of United Utilities, Vertex was primarily established to provide ‘call centre’ services to its parent company. The employee relations were very different in both of the merging companies therefore management had to make a decision whether to recognise trade unions or not. It is worth mentioning that traditionally utility sector was highly unionised. Privatisation in 1989 and 90 led to density falling though and the unions involved all campaigned actively against privatisation. During that time management of Vertex experienced difficult times as the cooperation with trade union and employee relations were concerned. Influenced by this, Vertex decided to break with the past as employment relations were concerned. They introduced the personal contracts to their employees to reduce the influence of the trade unions and to change their brand image to more stable and secure. It would also greatly increase their chances in winning new contracts. Although vast majority of the workforce decided to give up their bargaining rights in exchange for personal contracts, few resigned from trade unions. In reality, representatives that were chosen by workforce to consultation forum were union officials. Changes in UK Government and arrival of “Fairness at Work” White paper in 1998 indicated that Vertex might reconsider recognising Unison. Additionally Management of Vertex was finding it more and more difficult to win contracts and they thought that Unison’s links in public sector could help in this particular matter. Among the other reasons that influenced the change of mind in Vertex were raising costs of operating personalised contract system. Secondly was the realisation that trade unionism was present in the company for all that time and was a potential benefit with potential customers. Finally it was evident that Vertex was perceived as a good employer by trade unions. As a result of various discussions, negotiations and ballots of the workforce both parties signed a recognition agreement in 1999.

  1. The elements of partnership in employee relations.

Partnership at work, according to DTI (2007), “refers to the relationship between employers, employees and their representatives. It is about developing better employment relationships at all levels, helping to build trust in the workplace, sharing of information and working together to solve business problems.” Other definition of partnership can be understood as a “programme for managing workplace employment relations based on joint problem solving among the various partners which delivers mutually beneficial outcomes for all” (Gollan, 2005). Although countless definitions of partnership exist, they are all very similar and the two definitions give a broad explanation on this matter. Partnership is widely regarded as a cornerstone of business success. For many organisations, partnership also represents a best practice, modern approach to employment relations and a commitment to ensuring mutual gains. The principles are comprised of a set of essential commitments and required practices. For the purpose of this report we will use TUC’s six principles of partnership that can be described as the building blocks of partnership in every business. They are a mix of aspiration and practice, commitment and communication, employee involvement and willingness to change.  

 The main six principles that TUC endorses are (ACAS, 2007):

  • a shared commitment to the success of the organisation
  •  a commitment by the employer to employment security in return for which the union agrees to a higher level of functional flexibility in the workplace
  • a renewed focus on the quality of working life, giving workers access to opportunities to improve their skills, focusing attention on improving job content and enriching the quality of work
  • openness and a willingness to share information. So, for example, employers will share with unions and workers their thoughts about the future when they are at the 'glint in the eye' stage
  • adding value ­ unions, workers and employers must see that partnership is delivering measurable improvements
  • a recognition by both the union and employer that they each have different and legitimate interests.
  1. Advantages and Disadvantages of Partnership in Employee Relations

Building a partnership at work can be a crucial decision for the future of the business. Soon after signing trade union recognition, Vertex signed a partnership agreement in 2000. Partnership approach enabled Vertex and Unison to address the key business issues and helped them to resolve them. Healthy partnership involves a great communication between the parties but more importantly it increases the commitment and dedication of the employees. It can also bring motivation and loyalty into the business and placing partnership in the centre of your business will make your employees happier and much more effective. Partnership can also improve morale of the workforce and that can result in an increase of work performance that it is so much desired by employers. Also according to Gennard and Judge, partnership agreements are “an advantage to unionised employers in that they mean that simply saying “NO” cannot be the first response of the workforce to employer proposals for change”. Unions, when entering into partnership, have to realise that changes in the company will occur and that some of them will be advantageous to the company rather than an obstacle. Additionally, the supporters of the partnership at work, relying on TUC research, point out that workplaces with partnership approaches are one third more likely than others to achieve an average financial success and labour productivity.

  1. Indicators of success in Vertex

The success in Vertex can be measured in many ways and one of them must be market position. Nowadays Vertex is the leading provider of the outsourced business services and technology solutions for utilities, private enterprise and the public sector. In the past few years the company managed to win several very lucrative contracts and that point out how strong, dominant and most importantly - how successful Vertex is. To evaluate their success we also need to focus on Vertex’s business partners. Contracts with TXU Europe in 2000 worth £650 million (largest contract in Europe), Orange, Lloyds TSB, Powergen and worth $1.6 billion contract with US multi-state energy company NiSource to provide business transformation services in 2005, are just a confirmation of their position in the market. As an established company Vertex, since 2002, has also started acquiring other companies to strengthen their market position and increase business portfolio. From the business point of view the above indicators suggest that Vertex managed to become a leading outsourcing company in this very competitive market. The fact that Vertex was acquired by three leading US investment companies, Oak Hill Capital Partners, GenNx360 Capital Partners and Knox Lawrence International, in 2007 also tells us how flourishing and successful company it is (MarketLine Business Information Centre, 2007). They also bid to the Department of Trade and Industry for Partnership Fund money to develop the partnership agreement to deal with future changes.  In 2001 Vertex was also awarded very prestigious award by CIPD People Management for their outstanding partnership success.

  1. Conclusion

By conventional business measures, Vertex has been a notable success in a highly competitive market. Despite the clearly incorrect decision to derecognise trade unions in Vertex and becoming non-unionised company the management soon realised that having a well prospering alliance between employer, employees and union representatives can be much more advantageous to the business. Recognition of Unison followed by the partnership agreement helped Vertex not only internally but also externally. Not only it increased the commitment and dedication of the workforce but also helped to win contracts in the public sector thanks to the Unison connections. The partnership approach with UNISON has been spread across virtually all of the new contracts the company has subsequently obtained.

Bibliography:

  • Hollinshead G., Nicholls P., Tailby S. (2003) Employee Relations. Harlow: Pearson Education, 2003.
  • Rose E. (2004) Employment Relations. Harlow: Financial Times Prentice Hall, 2004.
  • Advisory, Conciliation and Arbitration Service (2007) Trade union recognition. [Internet], Available from: <http://www.acas.org.uk> [Accessed 10th November 2007]
  • Trades Union Congress (2007) Partnership. [Internet], Available from: <http://www.tuc.org.uk/partnership/index.cfm> [Accessed 16th November 2007]
  • Vertex (2007)[Internet], Available from:<http://www.vertex.co.uk> [Accessed 16th November 2007]
  • MarketLine Business Information Centre (2007) Vertex Company Profile. [Internet], Available from (through Athens): <http://dbic.datamonitor.com/home> [Accessed 18th December 2007]
  • Datamonitor (2007) United Utilities: Vertex sale imminent. MarketWatch: Global Round-up. [Internet], Available from: <http://www.ebsco.com> [Accessed 18th December 2007]
  • Sargeant M, Lewis D. (2006) Employment Law. Pearson education, 2004.
  • Gennard J., Judge G. (2002) Employee Relations. CIPD Publishing, 2004.
  • Gollan J. Paul (2005) Employee Relations, the International Journal. Emerald Group Publishing, 2005.

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