Tata Steel ballot update 2017

All members will be aware of the crisis the steel industry has faced over the past couple of years, which led to Tata’s announcement in March 2016 that it intended to sell its UK businesses with the threat of closure if they failed to find a buyer. This ballot is about the survival of the UK businesses, and the proposal being voted on should be considered in the context of our long journey to secure a future for Tata Steel’s remaining businesses in the UK. If you are employed at Speciality Steels please see below for more specific information.

Unite, GMB and Community are all recommending that you vote YES in the ballot to accept the proposal. 

Tata steel plantYour senior representatives unanimously agreed to recommend acceptance at a meeting on 26 January (after the date ballot papers went to print), based on the feedback from the BSPS consultation, and a late reshaping of the proposal to provide for an ex-gratia payment to compensate employees aged 50 or over who want to retire from age 60. Furthermore, the trade unions now have a provisional binding agreement with the company that underpins their commitments, which will be signed only in the event the proposal is accepted.

The proposal

The ballot paper states that the company’s proposals to secure a sustainable future for the UK business include a number of key elements, further details of which are provided below in line with the provisional binding agreement. For transparency all the assurances are conditional on three requirements: a sustainable solution for the BSPS, TSUK remaining solvent, and no industrial action in connection with the proposal. 

  1. Commitment to run UK businesses based on a 2 blast furnace configuration until at least 2021. Tata’s original offer was just 3 years; the extended guarantee is to ensure continuity and security of supply for the downstream operations. Further to this commitment the investment plan proposes investment in Blast Furnace 5 to extend its lifespan beyond 2021.
  2. Commitment to a UK-wide investment plan, which will be subject to ongoing monitoring by the trade unions. The investment plan is based on the ‘Strategic Asset Roadmap’ which proposes £1 billion of investment over 10 years for upstream and downstream operations across the UK. The investment plan will be calibrated based on achievement of profit and cashflow, however should TSUK make less than £200 million EBITDA then no cash will be taken out of the business. In the event of a Joint Venture TSUK will seek to run the UK businesses in line with the investment plan, which will be subject to ongoing monitoring and consultation with the unions and our experts. The investment plan has been assessed by Syndex, the union’s independent expert consultants, who have said: ‘Syndex UK have every confidence in the Strategic Asset Roadmap and recommend that the trade unions endorse and commit to the plan.’
  3. An employment pact offering protection against compulsory redundancies until 2021, equivalent to the commitment given to the Ijmuiden workforce.  This employment pact is essential given the ongoing discussions with ThyssenKrupp. It commits the company to taking all reasonable steps to avoid compulsory redundancies. We know the Dutch and German unions have been offered assurances and clearly we cannot go into merger discussions with the UK perceived as the easiest place to cut jobs.
  4. Introduction of a Defined Contribution Pension Scheme, with maximum employer contributions of 10 per cent, following the closure of the BSPS to future accrual. All the trade unions’ independent legal and pension advisers, as well as the BSPS Trustees, have advised that the Scheme has to close to future accrual, because as things currently stand the Scheme is headed for the Pension Protection Fund and the company into insolvency. 

The company intends to close the BSPS to future accrual on 31 March 2017, and introduce a Defined Contribution Pension Scheme with maximum employer contributions of 10 per cent (based on employee contributions of 6 per cent). To put these contribution levels into perspective the company’s original proposal was to bring in a DC Scheme with contributions of just 3 per cent from the employer and 3 per cent from the employee. The average contribution levels for Defined Contribution Schemes across the UK are 4.5 per cent.

Members of the new DC Scheme would be covered for death-in-service of 4 times qualifying earnings and income protection of 50 per cent of qualifying earnings for up to two years. In addition from 2020 an optional Private Medical Insurance package will be introduced for all FEP and F-J employees. Following closure of the BSPS all pension contributions would be made via the SMART pension arrangement on basis of assumed consent.

Additional aspects of the proposal

Ex-gratia payment for those aged 50 or above

If the BSPS closes to future accrual all members will become deferred and the early retirement provisions would no longer be available. Recognising that this change would be particularly detrimental to members in sight of retirement aged 50 or above, and in response to feedback from the consultation, the trade unions have been instrumental in supporting a reshaping of the proposal to provide for an ex-gratia payment from the company to compensate that group of employees. This payment would be available to employees who are members of the Defined Benefit Section of the BSPS at 31 March 2017 and joined pre-2006, and that retire and leave employment aged 60 to 64, up until 2031. Those retiring at aged 60 would receive a payment of £10,000, those retiring at 61 would receive £8,000, at 62 would receive £6,000, at 63 would receive £4,000, and at 64 would receive £2,000. 

Terms and conditions

The company is seeking to restructure the UK Profit Bonus, which has never paid out, and introduce New Joiner Rates and Conditions. Further to this the company aspires to make £13 million of employment cost savings across the UK. These items will be referred to the various lay negotiating bodies for their consideration.

Speciality Steels

As members employed at Speciality Steels will know Tata Steel is selling the business. Clearly many of the assurances provided by Tata will not be relevant to our members at Speciality Steels should a sale happen. However the trade unions have secured a guarantee from Tata that commits any buyer to honouring the new defined contribution pension arrangements should the Proposal be accepted through the ballot. This means that under a new owner our members in Speciality Steels would be entitled to the same pension arrangements as our members in TSUK, with employer contributions of up to 10 per cent.