Pay frozen at Tata Steel works in Scunthorpe but staff strike bonus deal
The 4,000 employees at the Tata Steel works in Scunthorpe have agreed to forego a pay rise this year in a deal that will see bonuses restructured.
The settlement will see some of the long-standing bonus agreements of workers transferred to their basic wages.
And the move has been described by union bosses as the best they could secure in the circumstances.
The deal comes in the wake of an order from the Indian owners to find extra savings of 20 per cent by April next year to help the company meet the gap in its annual financial targets.
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Sean Scorer, the chairman of the works multi-union committee, said: "The unions have adopted a common sense approach to this year's pay bargaining in order to maintain the sustainability of the Scunthorpe works."
Mr Scorer said he expected "a small financial benefit" in the pay packets of employees as a result of the deal.
The chairman said talks would continue over the next six weeks to discuss the restructuring of the site's bonus agreements. He has convened a meeting of the works delegates next week to further discuss the restructuring.
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Mr Scorer said: "We shall also be back at the negotiating table next April to put in a pay claim for 2013-14."
Nic Dakin, Labour MP for Scunthorpe, said: "This is a reminder that we are in tough economic times.
"As has always been the case locally, the management and unions have a sensible approach to moving forward in difficult times.
"It would be better to have pay rises of course, but it is sensible to come to sensible agreements so that things can move forward positively."
The bonus restructure will see cash transferred in three instalments from the 30-year- old quarterly lump sum bonus agreement on the Scunthorpe site. The first instalment of five per cent would be backdated from April 1 and there would be two further payments of two-and-a-half per cent in 2013-14 and again in 2014-15.
Mr Scorer explained the rise in the basic wage would mean the current 23 per cent ceiling for the lump sum bonus would be cut to 13 per cent in 2014.
At the same time, Tata Steel – for the first time since taking over the business in 2007 – will set up a profit-related bonus to be paid on a one-off yearly basis. The new bonus, to be paid on average earnings, will start at five per cent, rising to 10 per cent in 2014.
A Tata Steel spokesman said: "We have agreed with our trade union colleagues the terms of this year's pay deal for the majority of UK employees. There will be no general pay increase this year.
"We have, however, agreed to restructure bonus schemes which will result in five per cent of the local bonus being consolidated into employees' base salary this year.
"The five per cent consolidated will be replaced in a new UK profit bonus scheme.
"Over the next two years, a further five per cent of local bonus will be consolidated into salaries and replaced in the UK profit bonus scheme.
"This agreement will be backdated to April 1, 2012."
The present quarterly bonus is based on a complicated formula including elements for productivity and delivery, union officials say.