REDUCTIONS TO RATES, TERMS & CONDITIONS
Bectu is hearing reports of companies approaching their staff in the Animation and VFX sector, proposing cuts to pay, terms and conditions. Employers do not have a right to impose these changes on workers unilaterally and union members can access legal advice on this through the union in the normal way if and when it is needed.
However, it would also be appropriate for the union to advise members on the negotiating framework that they can use to respond to such a proposal. Bectu understands the serious commercial challenges that companies face at this time. The union would expect good employers to take any responsible steps needed to preserve jobs within their company and to ensure the viability of their industry going forward. There is nothing in this document that will discourage employers from taking any steps necessary to preserve jobs.
Bectu’s only concern is to ensure that it is done fairly. It should be as fair to employees as it is to shareholders, and as fair to the people who may lose their jobs in the near future as it is to the people who have their jobs preserved by any proposals to cut costs. It should be fair to people at all levels in the industry.
However, Bectu would urge these companies to bear in mind that they rely heavily upon a precariously employed “PAYE Freelancer” workforce, and this factor means that all employees in the sector have relatively poor collective bargaining power.
This advantage has fuelled much of their recent financial successes, and it comes with some responsibilities that should now be acknowledged. Any future success will depend on the continued sustainable workforce that has goodwill towards the major employers. One of the biggest challenges facing the industry in the medium term is going to be that of keeping this workforce involved in the industry. Early reports already show large numbers of people proposing to leave an industry that they believe is built upon one-sided working relationships. 1
These workers will need time to understand the life-altering decisions that they expected to make. They will need the kind of information that will enable them to understand the fairness of what they are asked to agree to, because in circumstances like this employees and shareholders will have very different interests.
Under these circumstances, it would be unfair for anyone to be given a “take it or leave it” offer without the opportunity to challenge it, and a reasonable amount of time to do so. For this reason, Bectu is urging these employers to consult the union, on the terms of agreed confidentiality, so that the union can explain the offer that is being made to these workers.
Above all, Bectu would strongly urge employers to discuss any plans with the union before putting their workers in a situation where they believe that they have been told to “take it or leave it and give us an answer within a few days”.
REASONABLE CONSULTATION TIMESCALES
It is unreasonable to ask people to respond to far-reaching proposals within a short period of time, when the change will have a seismic impact upon their career. It is even more unreasonable to do with employees having no access to independent information or advice that allows them to understand the reason for this request.
Where this has happened, we would urge the company to extend the consultation period to allow a meaningful discussion to take place.
It is important that the employees can make genuine counterproposals in good faith and to do so, they need to understand exactly what the nature of problem that each company is facing. They would like to know what kind of savings the company are looking for.
For example, would a company be able to achieve what it sets out to do by offering a cut in the hours worked at the same time as cutting 20% of the pay? Many VFX companies have policies of not allowing staff to work for other companies or on other projects while they are on a furlough, or on short-time working. Bectu would urge companies to remove ‘exclusivity’ clauses where they are asking for wage cuts, or where they are furloughing people, as people may be able to supplement their income by work on other projects in their own time. More importantly, any company that believes that it has a realistic prospect of surviving and paying dividends to shareholders in future should commit to repaying salaries that are lost during this period beforehand.
In addition, all UK businesses can access the interest-free Coronavirus Business Interruption Scheme loans and, therefore, should be prepared, in turn, to offer staff loans to cover a period of hardship. Wherever possible, loans – rather than pay-cuts – should be the means that companies use to mitigate financial difficulties.
Bectu are particularly concerned at reports of consultations that are not only short, but that seek to impose retrospective cuts in pay (i.e. cuts that will take place before the end of the consultation). The union will advise members individually on the legality of this, if it is imposed, but Bectu would urge all members, in the absence of a reasonable consultation timescale, to refuse to accept this aspect of any proposal.
The union would urge members to inform employers that, if it is imposed, that they will be working under those terms under protest until their personal dispute about this aspect of the proposal has been resolved to the satisfaction.
If a retrospective pay cut is absolutely necessary, and legally admissible, it can be done at the end of a reasonable consultation period as well as it can be done at the end of a short one.
UNDULY LONG REVIEW-PERIODS
Bectu would urge all VFX employers intending to ask their staff to accept reduced terms and conditions or wages, to do so on short review periods. This would mean that staff are consulted and asked to opt in to the reduced terms on a regular basis. To ask employees to agree to an arrangement like this for a period of 12 months is not reasonable – even if the employers suggest that they may unilaterally end the period of detriment earlier.
A long review period effectively tells employees that their only option is to opt-out and many of them will perceive a personal threat that would be attached to doing so.
Even if there is an offer to review this on more regular basis, it would make sense to say “we are asking you to accept these terms for two months, and we may need to ask you to opt into these terms, or similar ones, again if our commercial situation doesn’t improve at the end of this time.”
Bectu will be urging all employers to take this approach. To do otherwise is to ask employees to write a blank cheque to their employers.
VERIFYING THE REASONS GIVEN FOR ANY PROPOSAL
In order to understand the reasons for any proposal to reduce rates / terms / conditions, and its fairness, members of staff should have access to information that they can verify independently. It is unfair to expect an employee to accept a company’s explanation of complex financial matters uncritically.
The company has a number of options and some are more favourable to shareholders, while some are more favourable to staff. It is important that employees can understand where any proposal falls on that scale.
UNDERSTANDING THE SHAREHOLDERS POSITION
It has always been reasonable for employees to ask employers if there are options that would allow them to participate in a share-ownership scheme on the kind of favourable terms that many other companies provide to staff that they value. It is Bectu's understanding that, in some cases, UK Animation and VFX employers have not responded to these requests favourably.
Where employers have refused to allow staff to access such schemes, it is particularly hard for employees to take any appeal about “our“ company seriously from their employers.
It is the role of the shareholders to take the risks associated with the business, along with the rewards. Many UK VFX and Animation employers have been a hugely profitable business in recent years and shareholders have enjoyed lavish rewards thanks to the contribution of employees.
When assessing the fairness of proposals to change their terms and conditions, staff should be able to satisfy themselves that a 'shareholders take the risks' approach is the balance that is informing the business decisions that are being taken, and that they are not being asked to shoulder an unfair share of the burden of keeping a company afloat.
This raises a number of points. It would be reasonable for staff facing such proposals to have access, on a confidential basis, to information about the business position of the company, along with access to truly independent advice that would allow them to interpret it.
If employers agree to such a request, it will allow the staff to understand the fairness of the risk model that they are working on, and how fair it is for employees to carry a share of risks that could be carried by shareholders now.
After all, beyond their participation in a very competitive salary market, they may never have been invited to share the rewards that their work has generated previously.
Important note: Companies that have a union recognition agreement would routinely expect to involve the union in a confidential consultation of this kind, providing business performance information in a secure way. By the time an announcement would be made to staff, generally an agreement would have been made with Union employee reps. It would allow a much more reassuring message to be sent to all staff concerned.
ASSURANCES ABOUT THE FUTURE
When staff are asked to accept reduced rates of pay, terms and conditions, they are being asked to make a commitment to help to keep the company going. In such a case, it is only fair that they receive assurances about the job security at the end of any period of reduced terms and conditions.
Bectu urges members to press employers on future plans. If the reason for requesting new terms/rates is that employers are anticipating a future drop in volume (with VFX being a lagging cost compared to ‘acquisition’ of Production content), then our members would need to take a view on this. Bectu would have to ask if they are simply shoring up profitability at this point, in the expectation that when volume falls off, they intend to furlough / lay-off / made workers redundant?
We would urge members not to simply accept a cut in wages without reassurances that this is not the plan, or without suitable compensation plans in place that make the proposal fair to all (including people who won’t have a job to return to).
There are ways that employers can give reassurances. Many UK Animation and VFX employers operate a policy of only paying statutory redundancy terms when they make staff redundant.
In many cases, staff are also on relatively short notice periods - often the statutory minimum. Both of these facts are the result of business decisions made by companies in the past, and other employers – particularly ones in sectors where high staff-turnover are the norm - are often more prepared to be generous on these matters.
When staff are asked to make a sacrifice like this, it would be reasonable for employers to alter their approach to the job security of their staff and offer improved terms and conditions in return. Better notice period, redundancy terms and perhaps a commitment to repay workers for reductions in salary that they have accepted in order to preserve their jobs if they actually lose their job at any point in the next two years anyway.
Furthermore, we would urge employers to offer assurances to staff who go through any period of detriment about what will happen if the company feels the need to terminate their contract of employment before they have the chance to recover the lost earnings and benefits from the company at the end of this process.
THE IMPACT OF INCOME REDUCTIONS ON OTHER TERMS AND CONDITIONS.
The major Animation and VFX houses in the UK do not generally offer generous terms and conditions, in comparison to other similar industries. It is common for the provision of sick pay, redundancy terms, notice periods, or pension arrangements, to be on, or close, to the statutory minimum set down in UK employment law.
The UK Animation and VFX companies that have already furloughed staff under the COVID-19 job retention scheme (CJRS) have not generally done anything to ‘top up’ the 80% figure set out in the scheme to ensure that their staff take home 100% of earnings. Many other employers have done so (including major players in the UK film industry).
In addition many UK Animation and VFX companies rely heavily upon short fixed term contracts that are designed to keep workers in very one-sided employment relationships. This arrangement depresses wages, and significantly reduces the ability of those workers to be able to bargain fairly for reasonable terms and conditions.
Most damningly, many workers effectively have no access to parental rights.
As a result, it is also the norm in the UK, for some of the major VFX and Animation houses not to pay any overtime while expecting many hours of unpaid work from their staff. Not all companies are the same in this respect. To their credit, some companies have invested in management and improved their scheduling to reduce this reliance on unpaid work, but unpaid-overtime is very common in the UK.
Some employers have told Bectu that it would not be possible for them to retain a competitive edge while paying overtime, yet it the same employers will happily re-locate a department or a team to Vancouver where they are obliged to pay overtime because of local legislation.
When these workers are then asked to accept a reduction in their basic salary, all of these other entitlements will also be further reduced.
A pay cut therefore equals a cut in pension provision because pensions are usually a function of the percentage of a salary.
If staff are made redundant at the end of a period in which their pay is depressed, this will reduce the redundancy payments that they will be able to receive.
It will reduce the notice pay, or pay in lieu of notice (PILON) that they are entitled to in the circumstances.
If staff are made redundant at the end of a period in which their pay is depressed, this will reduce the redundancy payments that they will be able to receive.
It will reduce the notice pay, or pay in lieu of notice (PILON) that they are entitled to in the circumstances.
If staff are expected to accept terms like this, it would be reasonable to ask for assurances that they will receive, in return,
Better general terms and conditions – holiday terms, sick-pay etc
enhanced redundancy terms
a higher company contribution to their pension
a commitment to re-engage them on their full wage before any notice period in the unhappy event that the company has to make them redundant
It would reasonable to ask that any holiday accrued prior to any pay cut is still paid at the original rate of pay when it is taken. It would also be reasonable to ask that any time off in lieu (TOIL) that has been accrued prior to any pay cut can be taken at the original rate.
Furthermore, there is a chance that - after accepting a pay cut like this, the company may want to furlough the staff under the CJRS. The scheme pays employers 80% of the wage that staff are earning on the current PAYE system. In the circumstances Bectu would urge members to seek assurances about enhanced CJRS payments in the event of them being furloughed after having taken a pay cut.
Bectu urges all UK Animation and VFX companies to consult with the union prior to, and during any proposed periods of detriment to their employees terms and conditions. The union urges companies to allow staff to elect representatives who can seek help and advice freely from the union before people are asked to accept changes of this kind.
In the absence of a meaningful consultation, Bectu will urge all members to request any of the following changes in response to any Animation and VFX Company that requests a reduction in rates of pay, terms or conditions:
Commit to repaying lost income to workers before any future dividends are paid to shareholders
Commit to offering hardship loans and to mitigate any business difficulties using loans rather than pay-cuts
Any retrospective measures only taken with full approval of all staff concerned
A consultation period that is meaningful:
Long enough to provide time to consider options without being pressured - alongside an understanding of all options (including reductions of dividends or dividend repayments
Provide independent and impartial advice to members on the company's commercial difficulties so that they fully understand what the company wants to acheive and make counterproposals
Any cuts in pay should be offered in association with a cut in hours where appropriate
Remove any exclusivity clauses in contracts allowing workers to take supplementary employment
Guarantees about future employment
Improved notice and redundancy terms
A commitment to top-up payments to people on Covid-19 JRS furloughs
Compensatory improvements in terms and conditions such as improved pension terms, better Sick Pay, etc.
Paul Evans – Assistant National Secretary, 17 th April 2020.