Striking a deal
19 September 2005
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The Gate Gourmet dispute is thought to have stranded 110,000 passengers and cost British Airways (BA) £40m. It also dented the profits of BAA and, no doubt, many other businesses and workers in this country and around the world. On the other hand, Gate Gourmet has secured a better contract from BA as a result of the dispute. BA is reported to have agreed to increase the value of the Gate Gourmet contract from £130m to £140m a year and extended the contract period by two years to 2010. This is conditional on Gate Gourmet settling the dispute with its workforce.
The dispute raises many questions about the way we handle industrial relations in the UK. The general secretary of the Transport and General Workers' Union (T&G) Tony Woodley says that the treatment of its members by Gate Gourmet shows that the law has to change. He wants the Government to legislate to allow secondary action in industrial disputes, but is this really the right lesson to draw from the dispute?
The background to the dispute is the intense pressure on costs in the airline industry. BA had outsourced its catering business to Swissair. When Swissair went into administration, the business, by then called Gate Gourmet, was acquired by Texas Pacific Group in 2002. Like the rest of the airline industry, Gate Gourmet has been under pressure to cut costs. It had been making losses since 2001, with a further £25m loss forecast for this year.
It was trying to restructure its operations at Heathrow when staff walked out on 10 August. The workforce had discovered that the company had taken on 120 temporary workers to provide it with cover during the restructuring.
Gate Gourmet ordered the staff to return to work, and sacked 667 of them when they refused. This led 1,000 BA employees who work on ground handling, cargo and ground transport to walk out in sympathy for a 24-hour strike. It was this secondary action which brought the BA network to a standstill across the world and caused chaos for BA passengers at Heathrow.
Many of the employees who were sacked belong to the T&G, as do many of the BA strikers. However, the union could not support the strikes as neither of them were lawful: there had been no ballot or notice to the employers. Furthermore, the BA employees had no dispute with their employer. They were striking out of sympathy, or "in solidarity", with the Gate Gourmet employees who had been sacked. It was this secondary industrial action by employees who were not involved in the dispute that caused the enormous losses, and it is this type of secondary action which Woodley wants the Government to make lawful.
The organisation of strikes and other industrial action by unions is only legal to the extent that the Government of the day permits. As this dispute makes clear, industrial action can cause enormous damage to many people. It is for this reason that the law regulates the circumstances in which industrial action can be organised. Legislation does this by giving trade unions immunity from torts for which they would otherwise be liable at common law as a result of organising industrial action. Were it not for the 'immunities' granted by statute, the courts would hold the unions liable for losses caused by industrial action.
The Trades Disputes and Trade Union Act 1927 restricted secondary action to disputes within the trade or industry of the striker, but faced with the miners' strike in the 1980s, the Conservative government decided to remove the unions' immunity for all secondary industrial action. Despite the change of the party in power, that is still the position, so had the T&G supported the secondary action taken by BA employees, it would have been liable for the enormous losses caused. Indeed, to protect itself, the union was forced to write to BA repudiating the unofficial action taken by its members and urging them to return to work.
Rather than give the unions greater powers to take industrial action, as Woodley suggests, this Labour government has created a legal framework to encourage unions and employers to work in partnership. It has provided unions with a right to recognition if a majority of the workforce wants it, and the right to be informed and consulted about changes in the business under the Information and Consultation Regulations 2004, again, if this is what employees want.
Despite Woodley's rhetoric, one of the interesting things about this dispute is the extent to which the unions have tried to find solutions to the problems. Before the strike, the T&G had negotiated a plan for Gate Gourmet to achieve similar cuts to those it now proposes. This deal was rejected by the workforce. Moreover, it was the TUC, rather than Acas or the Government, which brokered the conciliation meetings between BA, Gate Gourmet and the T&G.
So although many have criticised, and will criticise, the workers who brought chaos to the BA network, it is difficult to mount a convincing case for casting the T&G, still less the union movement in general, as the villains of the dispute. Events moved too quickly for the two strikes to be organised by the union.
Despite this, the T&G may have to accept that which unions find most difficult to accept - that Gate Gourmet can get away with dismissing union members, people who may be union activists, and they will have no remedy. Gate Gourmet is insisting that it will not take back the 200 or so former employees it sees as trouble makers.
Nobody wants to return to the industrial relations of the 1970s and 1980s and this makes it very unlikely that Woodley will succeed in winning the argument for secondary action to be made legal. With such good material for making a case for the importance of good industrial relations to the economy, and the positive role which the unions can play in that, it is unfortunate that an influential union leader such as Woodley chose to focus the agenda on issues of the past.
As they deliberate on this at the Trades Union Conference, it will be a great pity if the union leaders do not celebrate the fact that it was Brendan Barber of the TUC who brokered the talks that led to normal BA services being resumed. Equally, it will be a great pity if they do not reflect on the fact that the Information and Consultation Regulations provide the T&G with a framework for ensuring that next summer BA employees are fully aware of the damage another dispute will have on their livelihoods before they walk out.
The T&G and its members at Heathrow have as much to lose as BA. Last month, for the first time, Ryanair carried more passengers in a month than BA. The union has far fewer members at Stansted.
Tim Johnson is a partner in the London office of Kilpatrick Stockton.