2^nd Master Class Session – 20^th September 2004
 

Background  

The British nuclear industry has undergone major change over the past few years. British Nuclear Group, formerly British Nuclear Fuels Ltd, no longer owns sites such as Sellafield and Capenhurst, but runs them as a contractor for the recently formed Nuclear Decommissioning Authority. 

This contract will come up for re-tender every three to five years. BNG recognised the need to become more flexible, competitive and customer-focused in order to be sure of retaining the business in future years.  

“The company and the unions as well saw that how we were operating was not going to work going forward into a more competitive world,” says employee relations manager Barry Mann. 

What changes were implemented? 

In 1999 British Nuclear Fuels agreed with its unions – the GMB, the TGWU, Amicus, Prospect ( the staff union) – a package of radical changes to working practices, hours and employee benefits, known as the New Contract.  It addressed five areas.

• Hours: the company introduced flexi-time and an annualised hours system for all staff.
• Structure: the company merged blue and white collar pay structures and introduced a form of multiskilling across the organisation for both craft and non-craft workers.
• Incentives: a target achievement scheme introduced performance pay across the whole company.
• Shift pay: this was changed from a percentage of pay to a fixed payment for all workers.
• Allowances: extra payments for equipment, travel and so on were “bought out” with a lump sum payment and a simpler allowance system was introduced.

In short, the new contract was focused on flexibility in terms of both when employees worked and what they did.

Annualised hours

Rather than use annualised hours to help manage seasonal peaks and troughs the system was designed to help the company deal with an ingrained high-overtime, long-hours culture.  Overtime was running at an average of 10-15 per cent with some people working as much as 40 per cent above their contracted hours. 

“An element had crept into BNFL where some people would work their week around the overtime so the work got done during overtime rather than during contractual hours,” says Barry. “[We wanted to] give people the opportunity to think of better, more efficient ways of doing things. 

“The main objective was to complete all our work within the contractual hours.”  

The company has a week of  38.75 hours gross, 35 hours net (lunch breaks are paid). It aims for employees to complete all their work within these hours, though hours can be “flexed” to fit both organisational and individual needs.  

Under the annualised hours system the company pays each employee, at a rate of time and a quarter, for a fixed number of extra or “banked” hours according to their position. For example, shift workers and first-line supervisors are paid for 100 banked hours per year, clerical and lower grades for 30 and higher grade managers for 50. Employees can be called upon to work these hours when there is a real, unforeseen business need. Because they are contractual, employees must work the hours when asked. 

Within BNG some employees had never worked, and never wanted to work, overtime, so the company offered these people the chance to opt out of the banked hours system. However, only five or six out of the 12,000 employees did so.  

“There were two reasons for this,” Barry says. “First, we said we would minimise the use of banked hours; and second, most people believed the extra hours were not that onerous – at most an extra two hours a week. Most people rightly thought, there is a chance I will get paid for something that will not be used.” 

A partnership approach

The loss of overtime and the introduction of annualised hours engendered scepticism and opposition among sections of the workforce, even though it was carried out as a partnership agreement with the trade unions.

“It was a difficult time,” Barry admits. “Clearly some people were financially a lot worse off through the loss of overtime, even though pensionable pay had gone up and there were lump sum payments. We laid on financial advice to help people deal with the drop in pay and a few people did take us up on that.”

He believes the partnership approach was crucial to securing the acceptance of the workforce and therefore the change in company culture.  “The big point was that it was jointly sold between managers and unions at national level. We gave presentations together to show it was a joint initiative.  

We had senior guys, the divisional director and the HR director, going round with national officers delivering the message to different groups. When it got to more nitty gritty issues, the likes of myself and the covenor did the presentations.”

Scepticism among members generally centred on the annualised hours part of the deal. There were fears, for example, that management might store up banked hours through the year and then force employees to work them all before the cut-off date in March - as it has in theory the flexibility to do. Managers, meanwhile, were worried that employees might use all their banked hours as quickly as possible and then hold the company to ransom if further manpower were needed. 

The senior management countered such concerns by promising to minimise the use of banked hours wherever possible. “[The workforce] said, if you are serious about changing the balance of work and leisure time, you will look to minimise the use of [banked hours]. So we said all right, we will. But that had to come from the top, from the chief executive,” Barry explains. 

BNG undertook to use banked hours only when absolutely necessary to meet exceptional circumstances and business needs outside the norm, or emergencies such as short-term sickness absence.  They are not used, for example, to cover training absences, annual leave, long-term sickness absences or other requirements that should be covered by normal staffing levels. But where employees are asked to work banked hours, they are contractually obliged to do so. 

The company also agreed to monitor the use of banked hours by asking local teams to get together each time they were used and discuss why they had been used and how the team could avoid using them again. “The use of banked hours gradually went down through this process,” says Barry.

Flexible working

Added flexibility comes from the widespread use of “credit time”. This allows managers to work out arrangements within teams to meet both individual and organisational needs - often without the need to resort to banked hours. For example, if a manager needs someone to work extra hours on a given day, he can either ask someone to use banked hours or offer the use of credit time and the chance to take hours off in lieu at a time acceptable to all parties. 

“We often use credit time in preference to banked hours,” Barry says. “The advantage to the manager is that they gain the added flexibility where previously they would have had to pay overtime, but they do not “burst the bank” of contractual hours. The advantage to the individual is that they still have those paid hours in the bank.” 

He admits that this requires that local managers are able to manage team members more flexibly and expertly, so that team requirements are met efficiently and equitably, and credit time is regularly “paid back” during quiet times, avoiding a build-up of hours owed.

Benefits to the business 

The scheme has worked well in general, Mann says, and has achieved its objective of banishing the overtime culture.  

The company has paid no overtime for five years – even downtime for training and team briefings are covered using credit time. In the year before the new contract was introduced, the company succeeded in reducing overtime levels from 15 per cent on average to 5 per cent in preparation for the changes.

Despite the initial costs of, for example, buying out allowances by putting a lump sum into wage packets, the new contract has saved “millions of pounds” per year, according to Barry. While for most people basic pay has gone up, those who were earning the highest amounts of overtime and shift pay have seen their wage packets “significantly reduced” in size.  

In terms of output targets, the last three years have been the organisation’s best on record. Mann concedes that headcount is up, though how much of this is due to annualised hours is not clear given the number of new plants opening.  

Sickness absence rates have fallen, though Mann says he cannot claim this is down to annualised hours. “I think it is pure coincidence,” he says, “though a number of firms operating this sort of system say it is down to peer pressure, everybody accepting they are in the same boat.” 

The use of banked hours is very low, and declining, as managers meet most of their needs using credit time. “We are getting everything we want out of our credit time, and meeting all our operational requirements. You may say we are overmanned then. But that doesn’t appear to be the case.”

Overcoming the problems

However, Mann points out that the organisation has to a certain extent been a “victim of its own success” in minimising the use of banked hours. 

“One of the problems we face now is that in some areas banked hours have become ‘untouchable’. Because credit time generally works so well, when there is a need to work banked hours it can actually become a bit of an issue.  Where banked hours have not been touched for 18 months or two years, when we do want to use them people sometimes say, no we don’t use banked hours here. We shouldn’t have let ourselves get into that position.” 

A small working group is looking at ways to overcome this problem. Mann says the company needs to emphasise the legitimate uses of banked hours, such as to cover short-term sickness absence, and to ensure that banked hours are used when appropriate. It has also issued guidelines for managers on what banked hours should and should not be used for. 

Another initial problem was that there was some build-up of credit time – some managers were not paying it back quickly enough by allowing time off during quiet periods, or they were failing to balance it out across teams. This was a particular problem among the shift team leaders.  

“We didn’t monitor credit time terribly well,” Barry admits. “While banked hours were always well monitored, credit time was monitored only locally. Collating the information and seeing where the problems lay was not that easy to start with.” 

Now, credit time is monitored with each employee inputting their own hours.  It showed several “hotspots” of credit time build-up and long-hours working, especially among agency workers and senior managers, and allowed HR to tackle these issues specifically.

QUESTIONS AND ANSWERS

Do managers have to give a certain amount of notice to staff when asking them to work extra hours?

“This was a big thing with the unions. In reality you give as much notice as you can. One problem is when someone phones in sick on a shift. We put in place local arrangements for this – where there used to be an overtime list, we have put in place a calling in list. Obviously there is no extra payment for coming in. That person can be called in on either banked hours or credit time.”

How did you handle complaints about workload?

“There must have been 20 or 30 different groups that came forward and said we can’t work annualised hours, we must have overtime. They gave 101 different reasons. It all came down to the belief that they couldn’t handle the work they were doing. We had a group of a dozen people looking at each case, comparing it with best practice. In practice, by flexing the day, week or month, every team was able to work within the system of annualised hours. They had always worked overtime so they thought two extra banked hours a week wasn’t going to be enough. In reality, the workforce worked out the solutions themselves. It was a mindset we had to get over. Once we had done that, they started to find ways of working more effectively, reducing wastage and so on.”

How did you get past the opposition from those who lost pay?

“The new structure meant most people assimilated upwards. Basic pay went up, pensionable pay went up. But those who had been working 40 per cent overtime took a big hit. But they were a minority and they were outvoted. After all this was part of a bigger deal. The lump sum payments were also an incentive. It made it easier to swallow the pill.”

How much management time do you spend on monitoring the credit time system?

“We have transferred to an electronic system so that has got rid of the requirement for HR staff to input the hours manually into the wages system. Everybody spending two minutes putting their own hours into the system saves us a lot of time. And out monitoring is better because the system is set up to give us the information we need quite readily.”

You say you made a mistake in letting banked hours get so low. What do you think you should have done differently?

“At first the aim was to have zero banked hours in the first year, to show that we were keen to minimise their use and to get away from the overtime culture. I think we should not have said that banked hours should be zero but we should have stuck to the legitimate use of banked hours. Sickness absence was so low we would never have burst the bank of hours, which is what management was worried about.

We will never get a significant number used because managers don’t want it. But I don’t think the NDA will be paying us for 100 banked hours per employee if we are not using any of them.”


 

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Last updated 9 December 2004