December 2, 2014 / 1:32 PM / 3 years ago

Jaguar Land Rover agrees UK pay deal with union

A Jaguar symbol is seen outside the Jaguar Land Rover's Halewood assembly plant in Liverpool, northern England, March 2, 2011. REUTERS/Phil Noble/Files

LONDON (Reuters) - British luxury carmaker Jaguar Land Rover said on Tuesday it has reached a deal over pay and pensions with union representatives after revising its offer, which will now be recommended to staff to settle a dispute that had threatened industrial action.

Pay talks at the company, which is owned by India’s Tata Motors (TAMO.NS), failed in October and over 95 percent of balloted staff subsequently rejected the original proposal in November, due to fears of a cut in pensions for some staff.

The ballot prompted unions to threaten industrial action.

On pay, management had originally offered staff a rise of at least 3 percent in each of the next three years and a one-year bonus, according to a union source, but workers’ representatives said that was not adequate reward for their contribution to the firm’s transformation.

After years in the doldrums, pretax profits have doubled in three years to 2.5 billion pounds in the year ended March 31.

The automaker had also proposed some changes to pension terms, according to a trade union source, but the company said on Tuesday pensions have not been affected under the new deal.

The carmaker, which built almost one in three of Britain’s 1.5 million cars in 2013, said it had revised its original offer with a pay increase of 4.5 percent in the first year of a two-year deal, plus a bonus payment of 825 pounds per employee.

In the second year, workers will receive the higher of either 3 percent or the Retail Price Index measure of inflation plus 0.5 percent.

Around 15,000 members of JLR’s British workforce of over 26,000 will benefit from the deal, according to unions, which will now have to be approved in a ballot.

“A revised offer has been made by the company that will be unanimously recommended by Unite (the union) to its members,” a joint statement from Jaguar Land Rover said.

Slow pay growth is a key consideration in Britain ahead of a general election next year and as the Bank of England weighs up when to begin raising rock bottom interest rates with policymakers watching for signs of a pickup in labor costs.

Tata has turned Jaguar Land Rover into a major profit-driver since buying the brands in 2008, having expanded production abroad and launching its cheapest ever car, the XE, designed to widen appeal and take on bigger rivals such as BMW (BMWG.DE).

Reporting By Costas Pitas; Editing by Greg Mahlich

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