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‘Labour relations must improve’

Published: 
Thursday, June 29, 2017

Industrial Relations expert says time has come to restructure and renegotiate at Petrotrin

Raphael Ajodhia, an attorney with four years of industrial relations and advocacy experience, shares his thoughts on the labour relations climate at Petrotrin.

 

Occasionally, the simple view is that which provides the most clarity.

On the October 26, 2016, Petrotrin declared a net loss after tax of $533 million for the previous financial year.

In March 2017, the Minister of Finance informed the country that Petrotrin also owed Government the net amount of $1.269 billion in taxes and royalties, and that Petrotrin had recorded losses in its refinery of $4.2 billion over the period 2011 to 2016.

Therefore, by any account, Petrotrin is a company that is simply not performing well.

Atlantic LNG was very recently reported as having a VSEP package to its workers, as had Repsol prior to its sale to Perenco.

BPTT, Royal Dutch Shell and BHP Billiton have all also engaged in cost-cutting measures which have resulted in the restructuring of their business and the reduction of their staff.

All these companies operate in the same sector as Petrotrin, and all can confidently say that they have a much more profitable business model.

So why has there been no comprehensive restructuring exercise at Petrotrin?

The most obvious answer is that under the present laws of T&T a company will find it difficult, if not plainly impossible, to restructure its operations when faced with opposition from its majority union.

The current benchmark of good industrial relations practice is that a company must consult with the union prior to embarking upon a restructure of its operations, however there is neither a precise definition to guide the parameters of that consultation nor a fixed time period within which that consultation ought to be completed.

The result is ample room for subjective interpretations as to what precisely constitutes “good faith” consultation, which often leads to an impasse that ends up before the Industrial Court should the company choose to proceed anyway.

Coupled with the other prerequisites imposed upon a company which flow from the narrow definition of redundancy as the existence of surplus labour only, the result is that a restructuring exercise at Petrotrin may be so easily impugned by a disagreeable OWTU that it may end up costing Petrotrin more in damages and reinstatement than the economic benefit the exercise was designed to realise.

Further, Petrotrin faces the additional difficulty of not being able to improve its financial position through adopting the industry standard of outsourcing its basic operations to contractors, due to the practical operation of a “Contracting Out” Clause in their collective agreement with the OWTU.

Essentially, the clause prevents Petrotrin from outsourcing work which would normally be performed internally where it would lead to a reduction in permanent staff and, further, mandates that where contract labour is engaged the contractor is required to pay the equivalent rate that is payable to a Petrotrin employee performing the same function.

There is no dispute that Petrotrin’s salary rates are significantly higher than the market average, so the net result is that it is markedly more expensive for Petrotrin to outsource work than for any other oil and gas company within the sector.

Petrotrin is severely restricted in its ability to adopt a much more beneficial and cost-effective measure by a clause which, no doubt, the union will never agree to amend or remove from the provisions of any future collective agreement.

Petrotrin, therefore, presents a prime opportunity to demonstrate the role of collective bargaining as envisioned by industrial relations theory.

Both the union and the company must bargain with the shared vision of improving Petrotrin’s financial outlook, and enter into meaningful discussions surrounding the restructuring of the company and the renegotiation of the collective agreement.

In theory, Petrotrin’s reality may serve as a lesson to unions and companies throughout the country that the economic hardships facing us necessitate a movement away from the adoption of antagonistic stances as a matter of principle and tradition.

For example, it may be in the best interest of all relevant parties to support proposals for reform of retrenchment legislation to include a widened definition of retrenchment, and the inclusion of specific explanations and time limits regarding the consultation process.

The time has come to stop opposing each other simply for the sake of opposition.

—Raphael Ajodhia

The time has come to stop opposing each other simply for the sake of opposition.