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Centrica takes controversial ‘fire and rehire’ process off the table until at least 2021

Image: Centrica.

Image: Centrica.

Centrica has pushed back its controversial ‘fire and rehire’ plan to January 2021, in an effort to focus on negotiations and avoid strike action.

The company had previously states that it would consider making the entirety of the 20,000 strong British Gas and PH Jones workforce redundant and then hiring them back with changed terms and conditions in their contracts before the end of 2020 if contract negotiations could not move forwards.

But after talks with unions, the company yesterday (8 October) signed an agreement to postpone the use of the S.188 process – often referred to as ‘fire and rehire’ – until next year. In return, the trade unions have agreed not to ballot for industrial action in October, and instead to continue negotiations.

To date, Centrica and the trade unions have spent more than 300 hours negotiating workers contracts sine July. The utility has said it will only use S.188 as a last resort, if a complete impasse is reached in contract negotiations, as it understands the impact this will have on colleagues.

Mounting pressure for Centrica

The policy has been met by widespread criticism, led by the GMB Union, with employees on the verge of striking according to a consultation ballot held in August.

Justin Bowden, GMB national secretary, said it was welcome that Centrica had “put a pause on their despicable plan".

In a letter to Centrica, Business, Energy and Industrial Strategy (BEIS) Select Committee chairman Darren Jones MP expressed his concerns over the “extreme measure”, outlining a series of questions the utility giant must now respond to by 14 October. He also raised the prospect of further committee investigation into the policy, a move which could see executives called to answer questions from MPs.

Additionally, shadow business and energy secretary Ed Miliband, shadow employment rights secretary Andy McDonald and shadow energy minister Alan Whitehead also sent a letter to the company’s CEO Chris O’Shea, calling the tactic "immoral, unethical and counter-productive".

While the move to push the potential use of the ‘fire and rehire’ policy back to after Christmas has been welcomed, GMB are arguing that it should be taken off the table completely.

“Working with, not against, the workforce and focusing now on serious negotiations that talk about growth not just cuts, is how to address the crisis created by past Centrica leaderships,” said Bowden.

“This temporary retreat comes after sustained pressure, condemnation and public and political outcry over the proposal to sack the entire British Gas workforce.

Contract changes and simplifying the company

Centrica has been looking to make the changes as part of a broader plan to simplify the company, as it aims to turn the tide on its growing economic struggles.

Speaking to Current± today, a spokesperson for Centrica said that transforming and restructuring the business to meet the changing demands of customers was “difficult - but we must take action to become more competitive and win back customers. We believe reaching an agreement with our Unions to modernise our company will unlock the potential to not only protect existing well-paid jobs but also create additional jobs – particularly skilled green jobs - in the future.”

The proposed contract changes include improvements to productivity and flexibility, the spokesperson continued. This includes asking engineers to work 40 hours per week, with 25 days annual leave, private healthcare for all colleagues, and "generous" sick pay proposals, which the company views as “both fair and very competitive in the market".

There will not be changes to base pay or pensions, they highlighted, but a greater degree of flexibility is needed for the company to deliver for customers along with consistent employment terms for all employees.

“Currently we have over 80 different employee contracts and 7000 variations of terms, as well as agreements that date back 35 years,” the spokesperson continued. “Talks since July remain constructive and we are optimistic that a negotiated settlement can be reached - we have been clear with unions and colleagues from the outset that the s.188 process is an option of last resort if it becomes impossible to reach an agreement.’’

The move to alter contracts and generally restructure are designed to mitigate the impact of stronger challenger competition eroding market share, low oil prices and the regulatory price cap which has impacted profits.

In the last two years alone, British Gas Energy has lost over a million customers because of these factors. The company has lost over half of its earning in the past decade, causing it to fall out of the FTSE 100 as its economic concerns continue.

As well as the restructuring, the company announced 5000 redundancies in June, including three management layers.

While the ‘fire and rehire’ policy is off the table for the table for now, Bowden called on the company to do the “decent thing” and keep it off for good.

“Make no mistake however, Centrica bosses are continuing to hold a box of matches and threatening to set fire to the terms and conditions of this loyal workforce once the Christmas decorations have come down.

“Centrica’s problems were not caused by the loyal engineers, call centre workers and back office staff who have done everything asked of them over years of boardroom mismanagement but have found their jobs in the firing line.”

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