BT sends staff out on loan to stop job cuts

Published on Friday 19 June 2009 10:04

TELECOMS giant BT is to send its workers out on loan to other firms in a bid to avoid redundancies.

The firm, which employs 1,800 staff in Edinburgh, is in the early stages of drawing up the scheme, which would be one of the most radical strategies of any UK firm.

It is not willing to confirm the names of the firms involved for commercial sensitivity reasons, but said they were "national and niche businesses".

The move comes after British Airways asked staff to take unpaid leave or work for nothing in a bid to reduce its costs.

Stephen Brown, an employment and benefits partner at Latham and Watkins, said that the one-off costs faced as a result of redundancy is leading more firms to think up other ways of cutting costs.

"Making someone redundant can often cost the same as six to nine months' salary," he said. "It is not a cheap option and it is a terminal option."

He added that firms did not want to lose staff that could help them recover. "It's in the company's psyche that they don't want to lose good staff and would rather reduce overheads via other means until the recovery begins."

Any move to farm out staff to rivals would have several risks, including that corporate secrets would be passed between companies.

In an agreement drawn up with unions, BT described the initiative, part of a wider "Project Holborn" cost-cutting initiative, as a "way of maintaining employees in employment within the company" during the recession.

It said that placements outside the company would be offered initially on a voluntary basis but would be enforced if fewer people than necessary volunteered.

Workers would retain their membership of the BT pension scheme and continue to accrue service during the placements, which would be for a minimum of one month. However, they would be paid by the new company, helping BT to cut its payroll costs.

BT chief executive Ian Livingston has already cut head-count by 15,000 in the past year, and last month announced that a further 5,000 permanent positions would go in the next year, along with 10,000 posts held by agency and contract workers.

Robert Blevin, external affairs manager of the Chartered Institute of Personnel and Development, said: "It is a marked sign of this recession that employers are being more innovative in their approach to avoiding compulsory redundancies where they can."

Unions are thought to be broadly supportive of BT's plans if they allow it to avoid compulsory job cuts.

Meanwhile, BT has also announced that former health secretary Patricia Hewitt is to become its new senior independent director.

She is to replace Maarten van den Bergh, who steps down at the company's annual general meeting on 15 July.