Only a year into his tenure as Centrica’s chief executive and Chris O’Shea already appears to have managed something none of his predecessors could – to stare down the might of the trade unions.
Over the past few months the increasingly rancorous dispute between O’Shea’s management team and the GMB union over changes to employee contracts has brought to mind the seemingly never-ending industrial battles waged in the 1980s.
However, the longest strike in Centrica’s history will reach some form of conclusion on 1 April, when staff still refusing to sign updated contract terms and conditions as part of O’Shea’s efforts to modernise the company face dismissal.
GMB, which represents around 7,000 Centrica employees, is the last to hold out against the plans, although its office staff have accepted the new conditions. Yet despite the union’s vocal opposition, several sources tell Utility Week that most GMB members have now agreed to the terms.
Indeed despite the heated rhetoric from his union against Centrica’s threats to ‘fire and rehire’ as a last resort, even GMB national secretary Justin Bowden ultimately believes most of the field force have, with a “heavy heart”, accepted. He references the deadline which passed yesterday (25 March) for staff to accept the deal before they face being sacked on 1 April.
“There are certainly people who haven’t signed so the prospect does loom of mass dismissals,” says Bowden.
But he adds: “I know that a majority of people will have signed yesterday but almost without exception within that group they will have done so with a heavy heart and with great, great anger and frustration.”
In the face of fierce, and as one observer puts it “vitriolic”, opposition from GMB, O’Shea has powered ahead with his plans for modernisation.
Looking at Centrica’s recent record of corporate woe, it’s easy to see why he so strongly believes in the need for change.
Despite owning and operating one of the UK’s most recognisable brands, in the 200-year-old British Gas, the company has been in continual decline for much of the last decade. Share prices have plummeted, millions of customers have flocked to newer retailers and last month it reported a £360m operating loss for 2020.
Months of negotiations followed the announcement last summer to completely restructure the business. The plans set out the axing of 5,000, mostly managerial roles. They also include updating terms and conditions for more than 80 different types of employee contracts, with more than 7,000 variations in terms, by reducing this to four standard contracts across the business.
Following “tough negotiations” in which Centrica said “significant concessions” were made, four unions – Unison, GMB, Unite and Prospect – put forward revised proposals to the ballot for their members.
In December it was revealed that Unite and Unison had agreed to accept the final offer, negating the threat of s.188 notices, or ‘fire and rehire’. Yet while early signs showed GMB was willing to accept the terms offered, the mood quickly turned sour.
Several industry observers believe that rather than balking at the actual terms being offered, GMB sees the dispute as more of a political battle. The fact Centrica even dared contemplate firing and rehiring employees as a last resort is a major sticking point for the union.
Bowden himself is keen to stress the s.188 notices are a major point of contention for those manning the picket lines.
He says: “They genuinely feel on one level that they are fighting a battle for ordinary workers in this country who can just be trampled all over by a piece of absolutely uncompromising legislation that allows employers to do whatever they want.
“The main reason they are motivated is because they don’t like what’s being proposed. They are being asked to work longer, get paid less as a result and it takes away a lot of their personal time. For most people this is work-life balance related, not financial.”
One observer tells Utility Week a number of GMB reps, who cost Centrica millions every year to facilitate, have been “treated with kid gloves” for so many years to the point where they are unwilling to accept any new terms, making attempts to restructure the business more painful.
The source says: “This is a group of people who they have treated with kid gloves to the extent where everything has been pushed back. Any reform or any change has been avoided whereas the office staff have always been much more willing to accept change.”
Several sources told Utility Week there is now just a “hardcore group” of around 500 field force employees holding out against any change. Bowden disputes the figure and points to the measures being heavily rejected in December and again earlier this month, following talks with ACAS.
As for Centrica itself, the company insists it must change in order to protect 20,000 UK jobs. Despite months of intense negotiations, there is no sign the company is prepared to waver from its course at the last minute.
A spokesperson says: “There is a job for everyone at the end of this process and our new terms are fair and very competitive. Our gas service engineers are some of the best paid in the sector, earning £40,000 and we’ve protected base salaries and pensions from the outset.
“We’ve made sure colleagues have the information they need to make a choice. We know change can be difficult but we have a responsibility to reverse our decline which has seen us lose over three million customers, cut over 15,000 jobs and seen profits halved over the last 10 years.’’
As Centrica and GMB head into a crunch week there will be potentially thousands of employees considering their futures over the next few days. With some employees on a three-month notice period, it remains to be seen how many will reconsider their decision during that time. We may yet see humbled firebrands returning to the fold.