Keeping employees happy with pay cuts looming

Employees at travel group Monarch have agreed to accept pay cuts and changes to working conditions to help secure the company’s future. The changes impact on the whole business and include sweeping concession of up to 30% reductions in salaries, as well as changes to working patterns and additional conditions. It’s a brave move by employees, who have sacrificed their own interests to increase the likelihood of investment in Monarch from Greybull Capital, who hope to transform the company into a low-cost airline. Should Greybull Capital retain the Monarch name – which would make commercial sense in terms of brand awareness – employees could have claimed TUPE, which would have secured not only their job but also contracted wages post-investment. Yet transfers, investments and acquisitions are very complex processes, and it would be difficult for staff to ascertain whether major restructuring – including redundancies – would take place as the company transitioned into a low-cost airline.

The situation with Monarch is a complete reversal of what is happening over at Air France, with pilots going on strike over plans to change their employment contracts. The trouble arose when Air France agreed to expand its low-cost Transvania operations and insisted that it must have the right to change employment contracts for those working at the low-cost subsidiary, resulting in possible ramifications for Air France pilots in the future as services across Air France and Transvania are altered to suit changing market conditions, with Transvania swallowing up some traditional Air France flights. Rather than accept the move, pilots have chosen to strike, arguing that the same contract should be offered to all pilots across Air France’s operations. Rather than submitting to the best interests of the company, Air France’s pilots have put themselves first.

If there is a lesson here for employers, it is one of prioritising communication to employees when wider business changes will likely affect employment contracts. Keep them informed of what changes are upcoming and, importantly, the reason why the changes are necessary – such as securing the company’s future and ongoing employment. Rather than focus on the company, make sure employee benefits are presented as clearly as possible, including incentives.