Tata Steel’s UK unit Corus has agreed to pay bonuses to its employees for the period of April to September.
“Corus is pleased to confirm that it has advised the trade unions that it will pay outstanding UK bonuses for April-September 2009,” the steelmaker said in a statement.
The bonuses for the period are thought to be worth several hundred pounds to every employee.
The company cited improving financial position as the reason for the U-turn in policy. It added that the decision has been reached partly because the company expects to achieve its financial targets, despite the challenging market conditions.
Previously, it said it would withhold 2009 bonuses until next year.
Around 300 Corus workers had approached the employment tribunal in UK and threatened to go on strike if the company violated a 30-year-old practice of doling out bonuses. The workers had decided to run a ballot to decide their future course of action.
Corus unions welcomed the decision as a victory for staff who had continued to meet production targets as the company fought to get back into the black. “As far as we were concerned it was an illegal decision and we were putting a case together with solicitors in London to prove it.
Management have had a reality check and realised that if they did not pay the bonuses all the goodwill from the workforce would go out of the window,” agencies quoted the chairman of a Corus union as saying.
Kirby Adams, managing director and CEO, Corus, had on October 28 said issues are yet to be resolved with the union with respect to how the bonuses will be calculated for the current year. “There are some disagreements whether bonuses should be paid at all in units that are not making any money. This is the main issue,” Adams had said.
Adams had said that the bonuses for the fiscal year 2009 (till March 2009) have been paid despite the fact that many parts of the businesses were not profitable. He said, “Hopefully when we meet again in four weeks (for Tata Steel’s consolidated results), everything will be fixed up.”
However, the European steel major hasn’t reached any new bonus agreement with the workers union and expects a dialogue on the same. “Corus also looks forward to positive discussions with the trade unions about future bonus structures that will reflect the overall company position,” the company statement said.
The decision has come at the back of improving demand for steel in the European market. Tata Steel vice-chairman said he expects Corus to be operating at full capacity by the end of the fiscal year in March. The company operated at 80% capacity in October, B Muthuraman said at an industry conference in New Delhi.
“International operations in the second half are looking much better. I can say that second half demand is definitely better in the world as a whole, including in Europe,” Muthuraman said. “We expect to step it up by next month.”
The company had been operating at about half its 20 million tonnes steelmaking capacity in Europe for the past few quarters.
(With Agency inputs)
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