Qinetiq, the defence research group, faces the prospect of industrial action after announcing plans to freeze the basic pay of its UK employees in 2009.
Unions reacted angrily to the proposal which they said had come “completely out of the blue”. Prospect, the defence trade union that has more than 2,000 members at the group, said Qinetiq had “unilaterally” announced the pay freeze without prior warning.
Mike Clancy, deputy general secretary, said the union was happy to engage with an employer, especially if they faced cost issues, but that Qinetiq’s behaviour was “no way to conduct industrial relations”.
He criticised plans to continue to pay bonuses for last year’s performance, most of which are targeted at senior management. “At a time when there is a lot of focus on bonuses . . . it smacks a little of ‘I’m all right Jack’.”
Executive compensation is a controversial subject at Qinetiq, which was spun off from the Ministry of Defence in 2006. Its senior managers, notably chairman Sir John Chisholm and chief executive Graham Love, received substantial windfalls from the privatisation.
Prospect will seek authority from its executive committee to canvass its members next week but the intent is “to ballot for industrial action”, Mr Clancy said.
Qinetiq, which employs 7,500-8,000 people in the UK, defended the proposal. It said the pay freeze, which would affect all employees, was “a prudent measure” in response to the downturn.
“This is a forward-looking measure about future costs,” it said. Bonuses would still be paid to those employees who had met their targets as they related to performance over the previous year.
Unlike its strongly growing North American business, Qinetiq’s UK operations have suffered from a decline in government spending. In February, it said it expected the government’s research budget to tighten further and it would focus on cost savings.