Board Initiative 1: Employee relations

Key features

  • 87.7% of employees are unionised.
  • Recognition agreement with AMCU signed in August 2013.
  • 66.1% of employees represented by AMCU at 30 September 2013.

Context

Unprotected strikes and general employee dissatisfaction are significant business risks. Rivalry between unions competing for members further exacerbates these risks by creating an atmosphere of fear and intimidation and undermining the spirit of teamwork which is essential for work safety. Mutual trust between unions, employees and management is therefore crucial for the sustainability of Lonmin's business.

The past two years have brought into sharp focus the complexity of the relationships between industry employees, their unions and management, and the scale and long-range consequences and ramifications when these relationships break down. The events have led to a significant change in the industrial relations environment in South Africa, a change that has happened particularly rapidly at our own operations, resulting in damaging periods of instability and violence.

Recognition structures

Trade unions negotiate terms and conditions of employment on behalf of their members, with a particular focus on wage increases. The South African mining industry has a long and established history of labour relations and collective bargaining, with mining unions playing a significant – and often political – role in the workplace and the economy. Collective bargaining agreements are framed by South African labour legislation requirements, to which we adhere. Recognition agreements are binding contracts confirming the terms of an employer's acceptance of a trade union as a legitimate bargaining agent.

Within Lonmin the senior responsibility for union negotiations resides with the Executive Vice President: Human Capital, who has a direct reporting line to the CEO.

Union representation

Union representation at 30 September 2013 (%)

At 30 September 2013, 87.7% of our employees were members of recognised trade unions (2012: 80.8%). The various trade unions active at our operations are the Association of Mineworkers and Construction Union (AMCU), the National Union of Mineworkers (NUM), Solidarity, the United Association of South Africa (UASA) and the Chemical Energy Paper Printing Wood and Allied Workers Union (CEPPWAWU).

A new recognition agreement

AMCU has had limited organisational rights at Karee Mine since December 2011 and at all of our Marikana operations since January 2013. Following extensive and complex negotiations, which were referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) in July 2013, AMCU was acknowledged as the majority union with a new recognition agreement signed on 14 August 2013. At 30 September 2013, AMCU had a membership of 66.1% of all of our employees.

The new agreement is fully compliant with the requirements of the Labour Relations Act and supports key principles of inclusivity and workplace democracy, notably the co-existence of all unions at Lonmin. Our employees' freedoms of association and expression, and their freedom to choose their own union representation are entrenched at Lonmin, and are also included therein.

Through the new recognition agreement, we strive to:

  • Uphold and respect employees' freedom of choice, and to contribute to improved employee-management relations.
  • Create the framework for a stable working environment with less potential for volatility, and without unprotected strike action.
  • Give unions and, in particular, AMCU the means and support to adequately fulfil their responsibilities to employees.
  • Ensure that our agreements and practice are aligned with industry-wide norms and developments, particularly in respect of bargaining structures.

Key aspects of the recognition agreement include:

  • Introduction of a 3-tier recognition system
    • 30%: basic organisational rights (access and deductions).
    • 40%: basic organisational rights, collective bargaining, entitlement to fulltime shop stewards and entitlement to office facilities.
    • 50%+1: majority union status which enables a union to negotiate other agreements such as threshold agreement.
  • Implementation of a single bargaining structure for all employees in Patterson grades A to C4 (includes Category 4 – 9, artisans, officials).
  • Secured involvement of all the minority unions in the 2013 wage negotiations.
It was also agreed that all substantive demands would be negotiated within the formal collective bargaining structures, and that regular communication between our Company and AMCU was important to promote honest conversation.

Branch and shaft committees have already been established at Karee, WPL and EPL.

Working with minority unions

Following the conclusion of this new agreement, NUM, UASA and Solidarity were notified of our intention to terminate their respective existing agreements, which was done in line with the respective agreements concluded with these unions. Importantly, the terminations enabled alignment of all the recognition arrangements with the new recognition agreement (in line with the requirements of the Labour Relations Act). However, we remain committed to working with all our unions, including minority unions, within the confines of the new recognition agreement and are exploring possible future engagement structures that include relations with minority unions.

Management continues to use the same notice period for constructive engagement with the unions for the purpose of exploring possible engagement options post the expiry of those notice periods.

Unprotected work stoppages and violence

Sadly we experienced four incidents of unprotected work stoppages this year and one protected work stoppage. These collectively resulted in the loss of six days of production.

We also experienced several incidents of violence adjacent to our operations. We were shocked by these incidents and condemn these acts of violence, which are contrary to the spirit of what we agreed to as members of the framework for peace and stability.

We continue to urge people not to take the law into their own hands. We also call on our partners, in particular our unions, to condemn murder and the use of violence in industrial and labour disputes. We urge everyone to support peaceful negotiation, to uphold our value of mutual respect.

In parallel, Lonmin has actively participated in industry discussions on the possible establishment of an industry forum for centralised engagement. This process is continuing.

GRI
LA 4
Percentage of employees covered by collective bargaining agreements.
HR 5
Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights.
LA5
Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements.
MM4
Number of strikes and lock-outs exceeding one week’s duration, by country.