Wednesday, 18 May 2016

National Express hits the buffers in Santa Rosa

Last week, I went to my fourth National Express AGM, and the second since I joined the ITF. I have to say this is a company that I view with increasing exasperation and I know colleagues both within the labour movement and the responsible investment field feel the same way.

I want to focus in on one case because I think it is is illustrative of the problem. In February 2013 Durham School Services workers in Santa Rosa, Florida voted in election covering a little over 200 people for representation by the Teamsters. The result was about 60:40 in the union's favour so not even close (this isn't "hanging chad" territory). Yet more than 3 years later the company still refuses to bargain with the union.

The company has thrown up various legal objections with relation to the election result in 2013. Despite having lost at every stage the company continues to appeal, most recently to the US Court of Appeals in March. During this process it has used two law firms, and obviously has expended company funds in three years' worth of legal fees.

The company's defence of its record in general is that in any business there will be one or two bad cases, but this isn't indicative of the company as a whole. In the Santa Rosa case in particular there are a couple of points that board members repeat over and over -
  • We have offered to the union to re-run the election
  • The way the ballot box was handled during this election is an important point of principle
I think both of these points have pretty large flaws.

To take the first one, the National Labor Relations Board (NLRB) certified the election result as valid. It has reviewed the company's objections and rejected them. Why on earth should the union agree to re-run an election that the government agency responsible for labour law says was valid and which was won by a clear majority? The question should be why, if the company really does "respect" workers' right to form a union, doesn't it simply accept the clear result of the election? It could have done this at any point in the last three years, but has chosen instead to drag the case through the legal system.

The second point is more interesting. Anyone who attended last year' AGM would have felt that there was a very serious issue with the ballot box. I know some people were left under the impression that a union member had moved (or even stolen) the ballot box. At last week's AGM it was again suggested that the primary reason for continuing to contest the election result related to the ballot box.

Again, this is challengeable. First up, it's important to make clear that the company's objections relating to the ballot box are aimed at the conduct of the NLRB agent who ran the election, not the union or its members.

More importantly, the ballot box issue was just one of several objections raised by the company and and pushed by the two law firms that have fought this case on its behalf over the three years since the workers voted for the union. For example, the company also objected that the NLRB should not have run the election in the first place because the Board itself was inquorate. This argument was an important part of its legal position until as late as February this year, when it was dropped as the point was knocked back in a case involving a different company. Separately the company objected to the use of a photo of an employee on an election leaflet. This was even though the employee had signed a form giving the union consent to use it.

In practice, if you look at the company's legal submission to the Court of Appeals last year (this is using law firm Constagy Brooks Smith, which incidentally advertises "union avoidance campaigns" as part of their services), even then the weight put on the ballot box issue was far less than the flyer. Count the pages dedicated to each point for yourself, See Reply Brief to Court of Appeals here.

And if you want to see how much weight is attached to the ballot box issue this year I would recommend listening to the audio of the hearing in front of the Court of Appeals in March 2016 (at this point Durham is represented by a second law firm, Seyfarth Shaw). You can find it at the link below and click on the audio file next to Durham School Services LP v. NLRB.

The words "ballot box" are never spoken. If this really was the killer issue in Santa Rosa as the board has suggested then I'm surprised that the law firm they are paying to fight the election result didn't even mention it in the short window of time available with the Court of Appeals. (In reality the company's main argument against the NLRB seems to be a process point, but leaning heavily on the flyer issue)

In light of all this I really struggle to accept the board's presentation of Santa Rosa as being all about the ballot box, though it no doubt sounds better in public than arguing about quorums. It's also troubling that people apparently don't really know what is being argued in this case after three years, and it being raised publicly at AGMs. In addition, as should be pretty clear, the company's fire has been overwhelmingly aimed in this case at the NLRB itself, not union members or the Teamsters. This makes the company's "offer" to the union to re-run the election even more ludicrous.

You don't have to just take my word for it. Yesterday National Express/Durham lost at the Court of Appeals. In the decision (I have a copy if anyone is interested) the argument relating to the ballot box is completely demolished, and is described as bordering on frivolous. It concludes there was "nothing in the record to support a claim that the Board Agent engaged in any conduct that might have tainted the election proceeding" and that the company "raised no reasonable concerns regarding the propriety of the election". The company, in other words, got spanked on this point.

I hope the company learns from this, though experience to date makes me sceptical. More importantly I hope that the workers in Santa Rosa get justice, and the union representation they clearly voted for over three years ago.

Friday, 13 May 2016

Ladbrokes: at it again

Last week Ladbrokes saw a 42% vote against its rem report. This was in response to a termination payment, and the company in turn issued a very solemn statement as part of its AGM results acknowledging the vote.
The Board notes the vote in respect of the Directors 'Remuneration Report. Ladbrokes understands the concerns expressed by some shareholders towards the termination arrangement with Ian Bull.  The Board is very aware of shareholder observations and these will play a key part in the Board's thinking as remuneration is considered for the business going forward and the potential merger with Coral.
Much like last year, when it.... errr... issued a very solemn statement in its AGM results in response to... errr.... a large vote against its remuneration report over... errr.... termination arrangements.
The Board notes the vote in respect of the Directors Remuneration Report. Ladbrokes has spoken with several shareholders about the termination arrangements for Richard Glynn where his contract required that any settlement had to be determined in line with UK damages principles.  The Remuneration Committee confirms that contracts of this type are not appropriate and termination arrangements for the current executive team, including Jim Mullen who was appointed CEO on 1 April 2015, are determined on payment in lieu of notice (PILON) principles in line with best practice.  The Remuneration Committee further notes that Jim Mullen was appointed on a lower salary and shorter notice period than the previous CEO.
I suppose it's an improvement of sorts. Although the underlying behaviour is the same, the company is now making solemn statements. This compares to 2011, when it... err... issued a statement in response to.... errr.... a large vote against the rem report, which said, basically, "whatevs"
We have noted the disquiet expressed by some of our shareholders and have recorded it for future reference.

Wednesday, 27 April 2016

Transport unions unite to condemn National Express

Top transport unions condemn National Express over labour violations

Senior representatives of the transport sector in the global trade union movement have condemned National Express over on-going labour rights abuses at its US school bus subsidiary, Durham School Services.
The executive board of the International Transport Workers’ Federation (ITF) has fully endorsed the invoking of the ITF charter on responding to corporate violations of workers’ rights against National Express by its North American member union the International Brotherhood of Teamsters (the Teamsters). The charter triggers action across the ITF’s affiliate base when notification is given by a member union that a multinational company has breached core labour standards and/or is engaging in union busting activities.Affiliates in the UK, where National Express is based, are leading condemnation of the company backed by unions from around the globe. A number of executive board members represent unions organising workers in countries where National Express operates, including in Spain, the Netherlands and Germany. The multinational is also seeking to grow its business in the Arab World ­ specifically Morocco and Bahrain ­ a region where the ITF has a strong and active presence.During the executive board meeting ITF general secretary Steve Cotton said: “We’ve seen evidence of labour rights violations across the North American school bus operations of National Express and we have serious concerns over the systematic denial to workers of their right to freedom of association and collective bargaining. We are bringing affiliates together ­ both in the UK and globally - to develop and execute actions to bring about a real change in the corporation’s behaviour. That’s what needs to happen and we won’t accept anything less.”Steve Turner, assistant general secretary of UK affiliate Unite the Union added: “Multinational companies that think that they can isolate workers and treat them differently depending on where they are in the world and what power they have locally are wrong – we are a global family of trade unionists watching out for union busting activities across the globe. The actions of National Express in this instance are unacceptable and we are building the necessary coalition of trade unions and political leaders to put a stop to them."We’re seeking an urgent meeting with the chair and CEO of National Express to address these issues and hold the company here in its home country to account for the actions of its management teams across the globe, ending what is clearly a deliberate strategy to obstruct union organising efforts of our sister union in the US the Teamsters. Further, the board will be made acutely aware of shareholder concerns over the company’s decision to deny a resolution demanding an investigation into the group’s actions in the US at the forthcoming AGM. Attempting to shut down a legitimate debate among shareholders is undemocratic and an abuse of the board’s power that should raise wider concerns.“Silencing shareholders, like threatening and intimidating workers or denying the basic international right to join a union, is not good business and the company’s reputation will be damaged as a result. We hope our message is clear and that the company will act urgently to change its approach.”

Monday, 25 April 2016

Ballax about bankers bonuses

I've been meaning to blog about this for a few weeks, and only now have time. I think the bonus cap is another issue where it is important that we look at what the industry (and other interested parties like rem consultants) told us would happen, and what actually happened.

So, we were told that a bonus cap would lead to banks sharply increasing fixed pay, which in turn would both increase their fixed costs significantly and thus reduce financial stability.

PwC provided a typical claim:
“If they do put caps in, this could have disastrous unintended consequences. It could result in significant increases in fixed pay,” said Jon Terry, global head of human resources consulting at PwC. “It substantially affects the flexibility of the business.”
Here's what actually happened - fixed pay for most bankers didn't increase sharply, there wasn't a significant increase in banks' fixed costs and there wasn't a risk to financial stability. That's the view of the European Banking Association anyway. They did find a large increase in the fixed pay of a small number of UK bankers, but this wasn't widespread enough to affect overall fixed costs or financial stability.

This is another example those who want to reform the financial sector should remember. Finance is important to the UK economy, and it's understandable that some people worry about the impact of reform on that sector, and whether the potential costs outweigh the benefits. Fair enough, but there's also a danger in taking too much of the finance sector's propaganda at face value. The reality of the impact of the bonus cap versus what we were told would happen shows us that baseless claims continue to be made in very strong terms (i.e. potential threat to financial stability). Remember that next time.

Wednesday, 20 April 2016

Solidarnosc win in Gdansk

Ridiculously pleased about this -

Celebration as Polish dockers’ union wins new deal 

“The ITF family has stood shoulder-to-shoulder with them as they have fought against the belligerent and intimidatory tactics of previous management. We are hopeful that dockers there can have better standards that are consistent with those in neighbouring countries. It is no less than they deserve.”
That from ITF dockers’ section vice-chair Torben Seebold after a collective bargaining agreement was signed between ITF-affiliated Polish dockers’ union Solidarność and Deepwater Container Terminal (DCT) Gdansk. It brings an end to a bitter three-year dispute that has included complaints from the union over victimisation and harassment by the employer and the firing of union leaders. There has been support from the global trade union community with demonstrations at DCT Gdansk and in other European countries targeting the bank that owns the port, Macquarie.The historic agreement, valid until 31 March 2019, covers pay rates, hours of work, holidays and general conditions for 600 workers at the fast-growing new terminal in northern Poland. A second terminal is due to open next year and the workforce will grow to 1500 workers as the port seeks to become the main gateway to Russia and central Europe.Seebold said: “We are sending out an important message to all port owners; we will not let you get away with trying to drive down pay and conditions by building new ports and employing cheap labour.”

Saturday, 16 April 2016

Corp gov reform: do something meaningful or don't bother

I blogged previously about Liam Byrne's intervention on company law etc. More recently Liz Kendall has written something for Progress that slightly touches on the same turf. There is one sentence of significance for anyone interested in left-of-centre views on company law, corp gov etc -
We need to change the system so shareholders who hold on to their shares for longer are rewarded with greater rights.
As I wrote previously, while I'm not opposed to look at differential shareholder rights we need to be aware of the downsides. Greater rights for long-term holders strengthens the position of Rupert Murdoch at Sky, Mike Ashley at Sports Direct, and index-trackers. Plus I am realistic - there would be practically zero support for this reform from mainstream investor and corp gov bodies.

Which raises the bigger question - what's the point? If Labour is going to intervene in company law issues, potentially aggravating issuers and/or investors in the process, I see no value in pursuing something so utterly weedy. I really question whether differential rights for shareholders would have any meaningful impact on the short-term pressures on companies (this is leaving aside the deeper issues of whether companies really are too short-termist, and, if they are, whether shareholders are to blame). So really what's the point?

I ended up feeling the same about putting employees on rem comms, which has much more going for it as something for Labour to champion in my view. If we're going to aggravate executives by introducing another voice into corp gov, why not put employees on boards? Just putting on the committees that set exec pay seems like a massive missed opportunity (and just giving employees a role in execs' pay seems even more likely to wind them up while not giving employees an influence over bigger issues).

So, in my view, Labour should either start floating some significant reforms that might change the direction of travel, or stop talking about it. I see no point in talking up short-termism and its effect on corporate priorities as a major public policy issue and then coming out with featherweight responses.

There are things that Labour could move that could be distinctive, change the corp gov settlement in the UK and start tackling market distributions. Reinvigorating collective bargaining, promoting employee ownership and representation on boards, changing directors' duties (something Byrne did touch on), enfranchising asset owners (rather than managers) and stripping out investment costs are some obvious things. But these need to be pushed together as a package of reforms with serious intent.

Picking a couple of individual, inoffensive (and ineffective) policies just to do *something* around company law because some companies moan about short-termism is not worth the effort.  

Sunday, 27 March 2016

BVCA and the Beecroft Report

I think it's fair to say that the Beecroft report, prepared by Tory donor Adrian Beecroft, was not universally welcomed in the labour movement.

One of the more controversial elements was the introduction of employment tribunal fees. The intention behind this policy was to discourage employees from making claims, because of the presumption that many of them are frivolous and could be initiated at no cost to the employee. Under the new system, employees pay ranging from a couple of hundred quid to £1,200 depending on the complexity of the claim.

Obviously the introduction of fees changes employees' willingness to initiate a case. The question is does it just discourage frivolous cases, or does it also discourage those with genuine claims but who aren't confident of winning? What we know so far is that there has been a sharp drop in claims, with sex discrimination cases falling most. According to this parliamentary briefing they fell by 83% in the year after the fee came in.

To be clear here: either the large majority of claims of sexual discrimination claims were groundless, or the introduction of tribunal fees is contributing to protecting those employers (or those that work for them) that discriminate against women.

As a party that seeks to represent working men and women, Labour has to take these issues seriously. And indeed we committed to abolishing the fees in the manifesto (after what looks to have been a bit of stalling it has to be said). The commitment is on page 23 of the 2015 manifesto here.

Not all organisations were so opposed to either the Beecroft Report overall, or the introduction of tribunal fees in particular. For example, the BVCA, the private equity industry trade body, was an enthusiastic supporter (perhaps not surprising given that Beecroft is a private equity guy). For example, here is what they said in their 2012 Budget submission:
On employment, we fully endorse the Beecroft Report as a step in the right direction. In particular, a “no fault” termination similar to that applied in the USA where notice is given under the employment contract would create a more efficient process as well as encouraging a more flexible and fluid workforce. 
So the BVCA saw the Beecroft reports as a way to make the "workforce" to be more "flexible and fluid". I don't think the objective here was job or employment security somehow.

Luckily, Beecroft didn't get implemented in full, but obviously the introduction of tribunal fees did. And, again, the BVCA was supportive (see top of page 6 here).
As recommended in the Beecroft Report, a fee which employees themselves have to meet should be introduced into the tribunal system. 
To be honest, I wouldn't expect employers, private equity firms or their lobbyists to take a position much different from this. Successful private equity managers are exceptionally well paid, and they have an interest in keeping labour costs low and employment protections weak. They expect their trade body to fight their corner. Beecroft's report was a long howl at how difficult it was to get rid of unwanted employees. And the BVCA fully endorsed it.

That's OK, because in the same way private equity has the BVCA to lobby for its interests, including making it easier to fire workers and harder for workers to take employers to tribunals, we have trade unions, and a Labour Party, to fight the corner for employees in return. They have their views, we have ours. In the case of Beecroft these views were polarised, and on tribunal fees they were diametrically opposed.

Now I'm a moderate lefty. I favour keeping the communication channels open, even where we disagree. The labour movement needs to understand the private equity industry and how it works (including to what extent its success represents value skimming). But I would sup with a long spoon. And I'm really not convinced it's a good idea to take money off them.