This contract is entered into and between Regional Transportation District Manag
ID: 345062 • Letter: T
Question
This contract is entered into and between Regional Transportation District Management (RTD) and the Teamsters Union Leaders. The 20 year old relationship between RTD and the Union requires that every three years a new contract is negotiated and agreed upon both parties. Therefore: The terms of this Agreement will serve as the employment contract for a period of three years governing the relationship between RTD and the Union and it will take effect immediately after the ending day of the contract from 2011. The specific terms of this employment agreement are as follows: I. 10% annual reduction in force for 3 years to meet the Colorado Department of Transportation’s mandate II. The agreed upon wage increase will be 3.25% III. Incentives for early retirement members in case 10% annual reduction in work force is not met. In consideration of the agreements detailed above, the first party agrees that it shall provide a wage increase set at 3.25% as agreed upon by Union and Management. The wage increase should take effect commencing on the first day the contract takes effect and should not stop or change by any reason until the completion of the contract. In consideration of the agreements detailed above, the second party agrees that it shall allow the reduction in force to be met through a natural attrition process. Teamsters Union will manage the reduction through a combination of natural attrition and retirement to satisfy most of the 10%. If for any reason the 10% is not met by the end of each year forced early retirement with incentives will cover the difference. RTD will cover all monetary obligations under the incentives. This contract cannot be modified in any way unless such modifications are made in writing and signed by both Parties. This document constitutes the entire agreement between the Parties and it is legally binding upon the Parties and their successors and will be enforced according to the laws of Colorado. The parties acknowledge that the breach or threatened breach to any of the terms of this agreement may cause harm to either party, therefore if a breach of contract occurs, that breach will void this agreement entirely and will require a new agreement to be struck. In addition if a breach occurs, the aggrieved party will be entitled to look for remedies available under the laws of Colorado. What elements were unique or particularly noteworthy? Did those elements address an important aspect of the management/union relationship? What benefit(s) will be realized? Given the rights and responsibilities of the parties, what problems do you anticipate during the 3-year term of the contract? How has the public benefited from the contract? How has the public been harmed?
Explanation / Answer
The main noteworthy items in the contract were
The important point to be noted here is that, the management at RTD is looking to bring down their workforce. However, they cannot do that without taking the union into consideration. The company (RTD) and the union both need each other. The relationship between them is symbiotic. Due to this fact, RTD is willing to provide some additional benefit (hike in compensation and incentive for forced retirement) and the union is not going cause problem for the next three years.
The benefits that will be realized are
The problem that we can anticipate is that 10% reduction in workforce may become difficult to implement. While the plan suggests that most of them will be through natural attrition and retirement, if those instances do not occur then RTD will implement forced retirement. However, the workers are not going to be happy with forced retirement. Also bear in mind that 10% reduction on an annual level makes it about 27% reduction in three years. The strength of the union will be nearly slashed by 1/3rd.
Public benefits from the contract through the increased compensation (3.25%) and in the knowledge that, in case they are forced to retire, they will be receiving incentives.
Well, mathematically about 27% of the workers will leave in the three years time. This will significantly weaken the union at the next negotiation phase. In addition, there will be people who will be forced to retire and that does not bode well for them.