SAIC Joint Trade Unions - Pay Claim 2005

Introduction
This pay claim is being submitted jointly by the recognised Trade Unions, UNISON and Prospect on behalf of the members represented under the two collective agreements operating within SAIC UK Ltd. The claim recognises that SAIC continue to operate in a highly competitive environment where the quality, skills and motivation of the employees remain instrumental to the Company’s success. In consideration of the claim, the Trade Unions continue to be informed and guided by recent surveys and meetings of members, which provide valuable information about their views and expectations.

The CJC remains the most appropriate forum for the settlement of non pay-related items - accordingly we have kept the proposals in this year’s claim to pay and pay-related items.

In continuance with previous discussions, we are proposing a settlement based on a three-year pay deal. This would not preclude separate agreement being reached on other items under negotiation at the CJC. A three-year settlement offers a unique opportunities for the Company to remove the uncertainty associated with future labour costs and establish a period of stability at this critical time in customer contract negotiations. As a quid pro quo the Trade Unions believe the stability of labour costs and improved utilisation of HR and Trade Union resources would allow for a more generous settlement than would otherwise be the case.

Detailed Claim

Pay and related items
 A substantial above inflation rise in base pay from 1st April each year for the next three years
 The base pay rise to flow-through to all related allowances each year.
 The base pay increase to be supplemented by a generous ‘Y’ factor to allow progression through the grade.
 Standby retainers to be brought up to the level of those being offered to new employees.

Merit Pay Scheme
 A commitment to be given to negotiations to replace the current Merit Pay Scheme with a Pay scheme which applies fairly across all employees.
Justification

Pay and related items

Pay

Average earnings have risen by 4.3% over the last twelve months across the British economy as a whole whilst pay settlements in January have clustered at between 3% and 4%. In the IT sector the SSL/Computer Weekly survey of jobs reported recently a 31% increase in the number of jobs being advertised with contractor vacancies up by 49%. This increase in demand for IT workers is being reflected in the highest average pay rises for IT staff since 1999, equivalent to 4% for permanent and 5.6% for contract staff (Computer Weekly 10/08/04). With inflation running at over 3%, since the middle of last year (3.2% in January), we believe that an above inflation pay rise is vital to help retain the services of experienced IT professionals and raise morale by meeting the legitimate expectations of staff. All forecasts suggest that inflation will continue to remain above 3% for the foreseeable future.

Within SAIC, all reports suggest that the last twelve months have brought a number of improvements in both Company and staff performance. The customer satisfaction surveys reported to staff meetings in recent months show an increase in ratings across all businesses and performance statistics show a further reduction in major incidents across service lines. Utilisation rates have once again been exceeded and new work outside the Scottish portfolio is gradually being built up. The expectation at the time of writing is that SAIC will win a two year extension on the ScottishPower contract, a testimony to the quality and effort made by staff across the Company.

The Financial statements from the Company show the percentage gross margin remains a healthy 26% whilst the PBT figure, has increased from 8.6% (2003) to 12.9% (2004), well ahead of the 7.89% reported for the SAIC Commercial Business Services Sector. The overall salary costs to the Company for the collective group of staff have been cut by over 11% from over £7 million last year to just over £6.2 million this year. 

In our view there is ample evidence to suggest that the Company are well placed to offer a fitting reward for the tremendous effort of staff by ensuring that pay increases do not fall below inflation this year.

Standby 

Despite the fact that standby rates for those on personal contracts have not been increased, they are still well in excess of those being offered to staff on collective contracts, which is a clear indication that collective standby rates are uncompetitive. This is especially provocative given that staff on collective contracts have many years of experience in providing standby support. This anomaly needs to be addressed to improve morale and ensure that we continue to retain experienced staff and remain competitive.

Merit Pay Scheme

The Merit Pay Agreement requires objectives to be agreed at the star of the year, mid-year reviews to be held with indicative ratings being agreed and an end of year appraisal with an agreed final rating. The response from the members’ survey paints a sorry picture on all these counts. One third of staff have no objectives, less than half of staff had a mid-year review, only one fifth had a mid-year rating set and only half of these were happy with the rating. Even more worrying, only just over half of staff reported having agreed an end of year rating last year and barely one third were happy with this.

The existing Merit Pay scheme is no longer taken seriously by a large numbers of staff at all levels of the organisation. It is proving cumbersome, unwieldy and divisive. With developments in Equality legislation placing new demands on pay and reward schemes, and the Company’s own statistics exposing a number of weaknesses in pay comparisons, we believe it is time to take a fresh look at pay and reward mechanisms across the Company. The aim should be to introduce a fair scheme across all employees which meets the rigours of new and anticipated pay legislation whilst still providing genuine incentives for improvements in staff performance.
Conclusion

We believe this claim will provide a sound basis for the Company to help retain skilled and experienced staff within the company. It will provide a solid platform for fostering healthy industrial relations and will ensure the company continues to retain the competitive edge it needs to win new work from external clients and repeat business from existing customers.

David Read, SAIC TU Secretary (on behalf of the Joint Trade Unions)