Shropshire Council has handed redundancy notices to its 6,500-strong workforce, informing them that they will be re-hired the next day if they agree to a 5.4% pay cut.
The council said that the move would eventually reduce its staffing bill by £7 million per year and help it to cope with a total budget reduction of £76 million over the next three years.
The alternative was “large-scale redundancies, which would involve the loss of at least 400 jobs and have a detrimental effect on frontline services for local people”, it added.
Jackie Kelly, head of organisational development at the council, said that the decision to terminate employment contracts from 30 September 2011 was reached after failure to reach a collective agreement with the unions.
“The council is following a legal process in order to introduce changes to terms and conditions, which is commonly known as dismissal and re-engagement,” she said.
These changes will be in the interest of our staff in the long term because they reduce insecurity about future employment. We have no plans to make further changes of this kind.”
“We are continuing to meet with the unions to see if there is still a possibility of getting a collective agreement, before 30 September, to implement the necessary changes.”
The new terms and conditions of employment offered to council workers also include reductions in the rate of sick pay and an increase in annual leave.
Kim Ryley, the council’s chief executive, said: “These changes will be in the interest of our staff in the long term because they reduce insecurity about future employment. We have no plans to make further changes of this kind.”
Unison general secretary Dave Prentis described the move as “a terrible way to conduct industrial relations which has left staff and their families anxious about their future”.
“Shropshire is not the first council to try to force through pay cuts in this manner,” he said. “Southampton council bosses have been facing weeks of rolling strike action over the plans to cut pay. This sends a strong message to employers – including Shropshire – that unions and staff will not take this treatment lying down.”
Michael Bradshaw, partner at Charles Russell LLP, said that the strategy was one of the few ways an employer could change an employee’s terms to their detriment.
He warned, though, that such action could still leave employers open to unfair dismissal claims, even with an offer of re-employment.
A terrible way to conduct industrial relations which has left staff and their families anxious about their future.”
“The employer will need to show genuine, good business reasons to proceed in this way,” he said. “The terms offered, the alternatives available, and the position of the unions and the employees will all be relevant. Unions may be of the view that the council did not have to take these measures.”
Government figures released this week reveal that the average public sector worker received 7.8% more pay per hour than their counterparts in private sector organisations, up from 5.3% in 2007 and the highest gap since the Office for National Statistics started keeping records in 2002.
But Brendan Barber, TUC general secretary, said that the comparison was “completely misleading” and was skewed by low rates of pay for less-skilled jobs, such as cleaning, which were often outsourced by public sector bodies.
“What the figures show is that the public sector is fairer than the private sector,” he said. “Public sector high flyers are paid 6% less than those at the top of the private sector, while those in less-skilled jobs on lower pay earn 6% more in the public sector.”
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