To what extent do employers hold the balance of power in
contemporary employment relationships in National Rail and
how do the differing dynamics, internally and externally,
impact on employment relations environments in large multi-
national corporations.
Joshua Lloyd
B701911
Word Count: 2415
Contemporary Developments in Employee Relations and
Employment Law
Introduction
Network Rail Limited is the owner (through its subsidiary Network Rail Infrastructure
Limited) and infrastructure manager of most of the railway network in Great Britain.
Network Rail is an "arm's length" public body of the Department for Transport with which
reinvests its income in the railways meaning they are state controlled and funded.
Network Rail control private train operating companies (TOCs) who are the companies that
use the rail system to provide transport services to the public. Since 2014, Network Rail has
been classified as a public sector body that operates as a regulated monopoly. Their income
is a mix of direct grants from the UK and Scottish Governments, charges levied on TOCs that
use their network and income from their commercial property.
In this report I will be exploring what employee relation frames of reference Network Rail
adopt and draw from real time case study examples to evaluate which key actors and
stakeholders hold the power and what intrinsic and extrinsic factors influence their level of
power. My analysis will be underpinned by well sourced reports and literature and will
ultimately influence a set of recommendations to resolve/improve the issues I discuss.
Employee Relations Frames of Reference
This section focusses on the key employee relations frames of reference and management
styles at Network Rail. With Network Rail being an arm’s length public body, its board of
directors respond directly to the Secretary of State for Transport and the strategic policies
are defined by the state, specifically the Office of Rail and Road (ORR). This means that they
are heavily governed within the four principles of the “Code of Good Practise” (GOV UK,
2017). By nature of this, Network Rail have a radical outlook frame of reference (Fox, 1974)
to employee relations and as a result of capitalism, are expected to experience a lot of
conflict between employees and management with the idea of control and autocracy (Wood
& Elliot, 1997). Trade unions are accepted to protect employer rights by constantly working
to develop things such as fair pay, working flexibility and workplace conditions (Bacon &
Hoque, 2012) Ultimately the state has majority power over these factors and with the UK
being a capitalist country, especially with the Tory party currently being in power in the
midst of a harsh economic environment, the employees of National Rail are bound to feel
underappreciated.
Trade unions are used to protect the employees’ rights therefore giving them collective
power so there are advantages and disadvantages towards employment relationship. Fox
argues that the pluralist perspective makes no sense unless there is a power balance
between employees, employers and the state due to pluralist outlooks being inherently very
bias towards the employer and state with the agreements between unionised workers and
their employers only being morally binding (Fox, 1974). This endemic reaction to conflict
(Salamon, 2000) is the root cause in the railway industry’s current crisis just as theorised in
Fox’s work.
Management styles in employee relations go a step deeper and can be split into two
categories: Individualism and Collectivism (Purcell, 1987). Network Rail seems to take a
collectivist approach where they allow the use of trade unions but management policy is
geared towards the development of collective representation by employees and allowing
employees a collective voice in management decision-making (Purcell,1987). However,
Network rail also have a bargained constitutional style of management which has low levels
of individualism and constitutes adversarial pluralism (Purcell & Ahlstrand, 1993). In
adversarial pluralism, employees and their unions are recognised are legitimised but the key
focus is usually on the distinctiveness of different actor’s goals rather than shared interests.
Whilst the different actors do recognise the oppositions motives, they rarely feel the need
to defend them any more than what is required to maintain a somewhat functional
relationship (Bray, 2019). This breeds selfish action on both ends and “opportunistic wins”
are actually embraced to the detriment of the oppositions interests. As a result of this, a lot
of bargaining strategies are deployed which somewhat try to balance the conflicting
interests but won’t necessarily care for imbalance (DiSalvo, 2015). This is used in most
public sector entities and is especially visible at Network Rail at the moment where recently
we have seen the ‘back and to’ of negotiations between RMT and the state with little
cooperation between the actors (BBC, 2022).
Current context of Employment Relations affecting Network Rail
In this section of the report I will focus on how current context of employment relations at
Network Rail and will evaluate the internal and external ramifications on stakeholders. This
will cover mainly the key issue Network Rail are currently facing, drawing from reliably
sourced information.
In the last few months we have seen the lead up to what is inevitably looking like biggest
railway strike in the last 30 years (Hazell, 2022). Thousands of Network Rail employees and
13 out of 28 major train operating companies have agreed to take industrial action for at
least three days in the upcoming weeks under the influence of the National Union of Rail,
Maritime and Transport Workers (RMT) (BBC, 2022). As a result of the industrial action, UK
rail service will be shut down across the country and will come to a complete standstill
which will in turn cost the transport and also entertainment industries billions in revenue
(FT, 2022).
The strikes are in response to a number of factors that have caused huge turmoil with rail
workers and the RMT and have been accumulating for years. Let’s explore these
individually. Firstly, the UK is currently experiencing its largest inflation rates in 40 years
with a recent increase up to 9.1% (Statista, 2022) stemming from rising energy costs,
decreased import and export after Brexit and a decline in the value of the GBP (Pollitt,
2022). Whilst this is happening, Network Rail workers have been placed under a three year
pay freeze with talks of a further year which contractually stops them being able to receive
pay increases (The Guardian, 2021). This renders them fully out of alignment with the rising
cost of living the UK is currently experiencing. It is reported that transport minister, Chris
Heaton-Harris has personally written to all major train operating companies explaining that
there is no extra budget available to increase the wage of 62,000 workers due to effects of
Covid-19 (The Guardian, 2021). However newer reports have since revealed that TOC’s have
actually been far more profitable throughout and since the Covid-19 pandemic, profiting an
extra £600m across the industry thanks to emergency fund agreements from the tory
government which have been cleverly manipulated to line the pockets of “fat-cat managers”
(RMT, 2022). Dividend payments have remained healthy with £73.5 million declared for
2020-21, while the TOCs are forecasting that they are well-placed for future dividend
payments over 2022 (RMT, 2022). Further evidence confirms this highlighting that there is a
huge problem in the transportation secretary, Grant Schapps’s overview of the average
salary of rail workers as he includes train drivers who are on an average of £59,000.
However, drivers are not part of the industrial action so are irrelevant to Schapps’ point (The
Guardian, 2022).
There has since been further fuel to the flames as the government and transport agencies
have been dismissing the RMT’s outrage. Schapps claimed that Network Rail have already
had pay increases and do not need more but valuations of these bonuses show to be the
equivalent of a 1% pay rise compared to the 9.1% rise in cost of living (The Guardian, 2022).
Then to make matters worse, in response to the strikes the government plans to remove
employment law stating that agency workers cannot be brought in to cover for striking
members of staff (BBC, 2022) In a joint statement, The Recruitment & Employment
Confederation (REC) and Trades Union Congress warned that lifting this ban will “prolong
the conflict” between employers and the staff taking industrial action. The proposal was not
practical because the existing ban on the use of agency workers is “a key element of a
sustainable national employment relations framework” (The Telegraph, 2022). This raises
the question of why can the government just change laws to suit their financial gain when it
suits them?
The industrial action is also in response to the thousands rail based jobs that have and will
be lost due to cut throat cost saving measures (The Guardian, 2022). In an email to staff
seen by the Guardian, Chief Executive at Network Rail, Andrew Haines, said that if we want
safe and affordable railway services “change needs to happen. A decision to stay as we are
is untenable”, “This will be tough for every one of us.” (Guardian, 2022) Yet as usual, the
rich stay rich with their larger than ever dividend packages and it is the grassroots of the rail
industry that take the hit. This decision to scrap a well favoured law is potentially the soft
law – “code of good practise” (Gov.uk, 2022).
Network Rail employees and RMT also state that they have working practices from the 70s
and feel that the overall efficiency of rail work is neglected due to the negative appearance
of initial costs to modernise and digitalise the rail system (BBC, 2022). This leads them to the
conclusion that they receive reduced pay due to negligence of efficiency development.
Roles of Key Actors & Stakeholders
I will now link the key actors and stakeholders to the frames of reference previously
discussed and evaluate implications this has on who has the power and its effects on
Network Rail. As aforementioned, Network rail being an ‘arms-length’ public body does
mean that ultimately the state has the majority of control over the company and their
subsidiaries. The state acts as a legislator and have full power over law creation that
influences Network Rail’s operational strategy. This is a tactic used by the government to
give them external control over public services whilst hiding the size of state influence and
also somewhat protects ministers from direct accountability (Heald & Steele, 2018). This
format significantly reduces the power that unionised workers who are usually forced to
comply with the state guidelines (Ellwood, 2016). In the current rail industry crisis, we can
see how this theory can become a reality with transportation secretary, Grant Schapps
denying accountability and doing very little to corroborate with the dismay of the RMT and
employees (The Guardian, 2022) The shadow secretary for transport, Louise Haigh, said that
Mr Shapps had “not lifted a finger” to resolve the dispute (BBC, 2022). Also the fact that
since industrial action has been threatened, the state has just resulted to unfairly adjusting
their agency worker legislation to suit them and cover for the striking staff (The Telegraph,
2022), demonstrating their definitive control. This results in the employees and even
directors of Network Rail essentially being pawns to the politically driven motives of the
state which of the tory government are usually profit building and cost cutting orientated
(Williams, 2000).
The introduction of the Trade Union Act in 2016 further restricted the power of trade unions
by heightening the threshold of success on industrial action ballots, restrictions on ‘Check-
off’ systems which would discourage the enrolment to Trade unions and reduce their
density and a number of other regulatory systems (Ewing & Hendy, 2016). This has had a
dramatic effect on union’s ability to conduct lawful industrial action, at least so long as
action is dependent on traditional postal ballots (Ford & Novitz, 2016)
Despite the limitations that the Trade Union Act 2016 impose on Unions, Leader of the RMT
has stated that this won’t just be a one-time strike, it will be an industrial action campaign
where a number of phases will be carried out over the next year (The Guardian, 2022). This
raises the question of how influential will the walk outs be. Unfortunately, it is looking like
employees of National Rail have minimal power over their own basic rights. Their only hope
is via the industrial strikes led by RMT. Reports suggest that by the state legalising the use of
agency workers to cover for striking staff will significantly reduce the power of the industrial
strikes (The Telegraph, 2022). Yet further analysis found that we may find agency workers
standing with the RMT and refusing the work, opting for more ethical work with less
political collateral which will certainly help employees achieve their goals (BBC, 2022).
Network Rail Employers want some level of harmony with employees however due to the
selfish nature of the radical frame of reference (Fox, 1974) they are being heavily influenced
on the instruction of the state who figuratively have a gun to their head as they control
National Rail’s economic management (Gennard, 2009).
Recommendations
Drawing from the three discussions in this report, I will now provide Network Rail with
recommendations on how to navigate the current rail striking and how to improve their
employee relations to reduce conflict and limit the possibility for further industrial action.
Firstly, I suggest that Network Rail invest effort into working with their employers and the
RMT to analyse where potential costs can be cut whilst increasing the value of the rail
service provided and improving worker’s practices. As the RMT leader stated, efficiency is
neglected in the rail industry and they work in pre-millennial practices (BBC, 2022). By
modernising practices such as the digitalisation of a lot of simple administrative tasks,
Network Rail can operate more efficiently meaning their employees can receive slightly
higher pay increases like they are striking for. This in turn benefits the state as it reduces the
need for employees taking industrial action resulting in the harmful temporary shutdown of
the rail system. It also allows the state to satisfy rail workers with pay rises in more
alignment to inflation but via organic profit rather than emergency funding. This seems to
be an effective form of collective bargaining and has some form of compromise and benefit
for all stakeholders involved, even customers who receive better service and reasonably
maintained ticket pricing.
Secondly, I recommend that Network Rail and their leading state managers collaborate to
reorganise their salary share more fairly between the ‘fat-cat mangers’ and the workers who
are pay frozen whilst managers are receiving huge bonuses and salary increases. By freeing
up funds from employing a fairer pay gap balance, employee relations will improve
significantly as workers will feel more valued. This will also reduce the need for industrial
action and will move towards solving the rail industry crisis.
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