No.18/06

Ref: IC/LEL AS.1.2

Date: 16 January 2006

To: Branches with Members in BT

Dear Colleague,

Openreach - Incentive Schemes

In light of current events, branches and members will wish to be clear about the precise stance of the Union to date in these negotiations.  This LTB is a report of developments regarding present and possible future incentive schemes within what became Openreach on 11 January 2006.

Background Report on Team Member Incentive Scheme (TMIS)

The T&FSE, at its meeting on 6 October 2005, considered a letter from Ian Flynn inviting the CWU to participate in discussions around a future incentive scheme within Openreach.  The Executive carried the following motion:-

(83)        The T&FSE resolved that:

1)                The CWU enter discussions as proposed in the letter from Ian Flynn dated 20 September 2005 on a without prejudice basis and that the proposed negotiating stance be placed before the Executive.

2)                Taking into account the circumstances in BT Openreach, the team are authorized, as part of the working group, to explore the use of Annex K of the Newgrid Agreement in any future negotiations and to report back to the Executive as part of 1) above.

3)                Any final outcome of negotiations be placed before the Executive and any positive recommendation will be the subject of a ballot of the members involved.

This was subsequently ratified by the carriage of the agreed minutes of 6 October 2005 at the T&FSE on 1 November 2005.  The letter from BT and the decision of the T&FSE was conveyed to Branches in LTB 535 issued on 8 November 2005.

Management were also advised on 8 November 2005 that the CWU would enter discussions as proposed in Ian Flynn's letter and that this would be on a without prejudice basis.  Further, management were advised that we would explore, as part of the working group, the use of Annex K of the NewGRID Agreement.  This, as you may be aware, sets out the procedures and protocols to be followed prior to and after the introduction of non-contractual bonus or incentive arrangements.

Within the context of this, we indicated that we were happy to discuss all aspects of TMIS including its relevance in the new Openreach context.  We set out the broad principles that we would seek early understanding on.  Any scheme would have to be inclusive of all CWU represented grades in Openreach and be seen as part of a wider cultural approach.  Clearly, it would have to be fair and equitable as well as ensuring it was not discriminatory in any way.  Finally, it would have to be relevant and key into Openreach's regulatory function.

On 23 and 24 November 2005, the team participated in a 'hothouse' event in Tring aimed at working through the broad principles of any future scheme.  This was attended by representatives from the various Operational, Finance and HR units within Access Operations and Planning.

As well as emphasizing that we would need to be convinced of the benefits and relevance of an incentive scheme, the CWU team set out some basic principles for any future scheme such as:-

.          Cannot be a substitute for training or good management

.          Equal reward for equal effort

.          Non discriminatory all embracing

.          Does not impinge on 'Newgrid'

.          Key into Ethos/Culture

In subsequent meetings and discussions with management, the consensus is there that any scheme will be voluntary, non-contractual; team based and will be open to all CWU represented grades in Openreach.  It has also been accepted by management that the outcome of negotiations, if successful, will need to be put to our membership in a ballot.

The precise definition of a 'team' has yet to be finalised since it is inevitably tied up with the development of the Openreach structure but current thinking is that it would likely be at Tier 2 or 3 levels for most functions.

Some of the measures that could be used are:-

  • Access Plus
  • Met from Stock
  • Repair Dwell Time
  • EBITDA

Since we have not yet got into detailed discussion on any arrangements, it is impossible to say whether these measures would be acceptable or adaptable nor are they exclusive.  At this stage it is only possible to point out that, in themselves, they represent a team based approach since none of them can be wholly influenced by individuals.

Management have a desire to have a new scheme developed by 1 April 2006, although recognise that, should we reach agreement, this timescale may well be altered by our consultative structure.  The CWU team, for its part, has not committed to any timeline.

In related discussions, we welcome the fact that both sides recognise that the issue of 'leadership style' will be crucial in developing a very different culture in Openreach and that considerable effort must be made to get this right.  It is a fact that FRS was but a part of the wider Project Watford.  Inevitably, it's contentious past ensured that FRS received far more public attention than other aspects of that project.  As important to the CWU team at that time were the issues of management style, working practices, network investment, managing capabilities and a host of other related matters.  This remains the case and, irrespective of the future of incentive schemes, these issues remain very much on our agenda.

Background on current Field Reward Scheme (FRS)

It has previously been reported that the team has, since the creation of Access Operations and Planning in July and more recently since the announcement regarding the creation of Openreach, consistently and repeatedly raised with management that speedy decision must be made on FRS since its existence could quickly become an obstacle to the practical creation of Openreach and would do nothing to engender a spirit of team working since it only applied to part of the workforce.

The first practical expression of this was the proposals for a Real Life Trial to be held in Guildford, Reading and Bracknell. This was reported to the T&FSE at its meeting on 1 November 2005 where the following recommendation was carried:-

That no agreement is given to the Real Life Testing Project trial proposed for the Guildford/Reading CSTs without a commitment from management that the FRS Scheme is effectively neutralised by giving all members affected by the trial equality of payment.

The CWU team put to management that this meant that we believed that everyone, i.e. Network build people, Planners, Frames, etc as well as ex-Field Service people should receive a payment.  This decision was conveyed to management and prompted a series of fairly heated debates.

The team argued that we would not, under any circumstance, accept a situation where people were in the same Tier 1 grouping with some being eligible for FRS payments and some not.  The team argued that FRS could effectively be neutralised by giving everyone in the trial some kind of average payment.  Management did consider this but concluded that this would be cost prohibitive and could be interpreted as acceptance that there would be a future scheme despite both sides having a position that this was not a conclusion that either had come to.  As a result, the trial did not go ahead in the manner proposed.  There is no integration at Tier 1 level.

These discussions sparked a wider and more complex debate on the future of FRS.  It will be recalled that we had previously given agreement to the trial of FRS 2005 with the intent of, if it were jointly agreed that there were not significant issues, extending throughout the former Field Services.

Initially, Openreach management wished to roll-out FRS 2005 across the former Field Services.  However, after the team's intervention, this decision was rescinded and, apart from BTNI and the FINE trial in South Yorkshire (itself a variant), FRS 2005 is effectively ended.  Separate discussions will be held on BT Northern Ireland since this remains in Retail and will not be part of the Openreach discussions.

The critical issue was the future in Openreach of FRS itself.  The team has reiterated its view that its existence in its present form continued to be an obstacle to the creation of Openreach.  As the managerial appointments process continues apace, the first practical realignment of teams will be likely in February and March.

Management have accepted that there needs to be an early switch off of FRS.  The CWU team has made it plain we do not see this as dependant on agreeing a new scheme.  The team put forward the view that an early decision on FRS is important and that the money saved could be redistributed (without prejudice to any negotiations on a new incentive scheme) to all CWU represented grades in Openreach as recognition of the contribution made towards the service recovery programme.

Management would not agree to this, although it remains committed to the view that FRS must be switched off.  The Company's view is that so-called interim payments or "Flight Path payments" as they were referred to in debate, should only be made to those who participated in FRS.  The CWU has argued that this in itself could be seen as discriminatory for many reasons.  In a letter to management, we made the following points to illustrate this.

"For the record it is worth again pointing out that even the methodology by which Openreach wishes to reward FRS participants alone is fraught with in built unfairness.  As I have previously said, there are residues of people who have earned little or nothing from FRS either through exclusion (e.g. Field dynamics teams), through the type of work they were doing during the measurement period (Root Cause Repair, Hoist, etc), through illness or leave, or through being on Second Stage Repair (currently capped at £40).  Conversely relatively new recruits from last year who are single skilled potentially could benefit because they were able to do a lot of the easier jobs.  All of this would create divisions amongst the ex-Field Service people themselves, never mind those previously from Wholesale.  This is not the way to begin to create a new ethos in Openreach.  I may add that the Openreach approach has no real business case that we can see".

This issue has now come to a head with management going ahead with the decision to switch off FRS on 5 February and to effect the 'flight path payments' despite the clear concerns of the Union.  In anticipation of this possibility, the CWU Executive at its meeting on the 4 January 2006 set out its position as follows:-

a)    The CWU views any attempt by BT to continue with any form of payment on a discriminatory basis - i.e. to those previously receiving FRS payments - as counterproductive to ongoing discussions with regard to TMIS and will not be supported by the CWU.

b)    In addition, termination of FRS must apply to all Bonus related aspects, including TOIL.

c)     Should BT proceed without agreement, the Openreach team is authorised to explore all negotiating options available to pursue T&FSE policy.

The team has tried every avenue open to us to change management's mindset away from its present course of action.  We have indicated that should Openreach go ahead with what we believe to be a counter productive process, then the Executive may need to review its attitude to participation in TMIS negotiations.

The reference to TOIL above is because management has indicated that it would like the current arrangements to continue.  We have responded that, outside of FRS, there are no arrangements for TOIL.  In any event if FRS goes, then there is no points' incentive for people working beyond their normal finishing time.  Our advice to members is that all work, with the exception of FLEX arrangements in CSIP, done outside of normal start and finish times, must be on overtime as per the NewGRID Agreement.

This report is fairly detailed; however the CWU team believes it necessary to formally set out its approach to this complex issue to date and in doing so guard against misleading or mischievous rumour.  Further reports will be issued as events unfold.  We will circulate the relevant management briefings separately.

Yours sincerely,

Ian Cuthbert

Assistant Secretary