Industrial relations

Pirelli Group industrial relations are conducted on the basis of constructive dialogue, fairness and respect of the various roles involved. Guaranteeing and respecting free trade union activities is one of the key values on which Pirelli bases its own Human Resource Management System. Relations and negotiations with trade unions are managed locally by each affiliate in accordance with the laws, national and/or company- level collective bargaining agreements, and the prevailing customs and practices in each country. At this level, these activities are supported by the central departments, which coordinate activities and ensure that the aforementioned principles are observed throughout the Group.

In the course of 2014 the Industrial Relations activity has reached major negotiation results both in Italy and abroad. In Italy, this has been as part of the renewal of the national collective bargaining agreement and supplementary corporate contracts at the sites of Milan Bicocca, Bollate and Settimo Torinese. Abroad, as part of the renewal of collective bargaining agreements at the Group’s industrial sites in various countries such as: Romania, United Kingdom, Germany, Brazil, Argentina, Mexico, Egypt and Turkey.

On 18 December 2014 the sale was finalised to the Bekaert Group of Pirelli’s steelcord business in Italy (Figline), Romania (Slatina) and Brazil (Sumaré) and on 5 February 2015 that in Turkey (Izmit). As announced in February last year, the agreement for the sale also includes the transfer of the steelcord business held by Pirelli in China (Yanzhou) to Bekaert. The completion of the deal, however, remains subject to regulatory approvals from the local authorities expected by the first quarter of 2015. The decision of selling the steelcord has allowed Pirelli to phase out of an activity which, considering the company's strategy of focusing on the Premium tire higher profit margins segment, did not have adequate competitive dimension. At the same time this decision has, nonetheless, ensured a long-lasting future for the steelcord business within a group leader in technologies for the transformation and coating of steel cables.

Industrial Relations also play an active role in the Group’s commitment to health and safety, characterised by the active participation in the issue by both trade unions and workers. In fact, 79% of the Group’s employees are covered by representative bodies which periodically, together with the Company, monitor and confront, with the support of specialists, current issues and the awareness plans/programmes in a perspective of continuous dialogue aimed at improving the various activities carried out by Pirelli to safeguard the health and safety of employees.

During 2014 there was no corporate restructuring within the Group. In any case, in line with the Company's sustainable approach, in case of restructuring, outplacement policies have been adopted through framework agreements with leading companies concerning outplacement plans. Finally, in relation to the start of operations with substantial impact on employment with repercussions transnationally or locally, the company acts in accordance with the procedures and practices of information and consultation of employees provided by the laws.

EUROPEAN WORKS COUNCIL (EWC)

The Pirelli European Works Council (EWC), formed in 1998, holds its ordinary meeting once annually after presentation of the Group Annual Financial Report, where it is informed about the operating performance, operating and financial forecasts, investments made and planned, research progress, and other matters concerning the Group.

The agreement establishing the EWC provides for the possibility of holding other extraordinary meetings to fulfil the information requirements of delegates, in light of transnational events concerning significant changes to the organisational structure of the Company: opening, restructuring or closing of premises, important and widespread changes in work organization. EWC delegates are provided with the IT tools that they need to perform their duties and a connection with the corporate intranet system, for the real time communication of official Company press releases. 

In February 2015, the Committee consisted of 13 members from the offices of the countries entitled to representation in the Committee: Italy, Germany, Spain, Sweden, Romania and the United Kingdom.   

Compliance with statutory and contractual obligations governing overtime, time off, association and negotiation, equal opportunities and non-discrimination, bans on child and forced labour

Group policy has always promoted compliance with all legal and/or contractual requirements concerning working hours, the use of overtime and the right to regular days of rest.

These requirements are often the subject of agreements with trade unions, in line with the regulatory context of each country. There are no restrictions on any worker’s right to use his/her total number of holidays. The holiday period is generally agreed between the worker and the Company. Pursuant to its Social Responsibility Policy for Occupational Health, Safety and Rights, and Environment and in accordance with the requirements of the International Standard SA8000®, adopted since 2004 as a reference tool for the management of social responsibility within its affiliates, Pirelli monitors the implementation of the requirements in terms of respect for human rights and work through periodic audits, both commissioned to specialist third party companies and performed by the Internal Audit Department. Particular attention is paid to the sustainability of Pirelli sites (and those of suppliers) operating in emerging countries. 

The three year internal auditing plan covers all Pirelli sites. Normally every audit is carried out by two auditors and takes three weeks on site. The Internal Audit Team has received training on the environmental, social and ethical elements of an audit to enable them to carry out an effective, clear and structured audit, granting Pirelli an effective control over all aspects of sustainability. If compliance violations are found during these audits, an action plan is agreed between the local managers and central management, with precise implementation dates and responsibilities. The Internal Audit Department monitors the status of implementation of agreed action plans, through specific follow-up measures. All the managers of the affiliates involved in the audits have been adequately trained and made aware of the subject and audit procedures by the central functions assigned, in particular: Sustainability and Industrial Relations.

The external and internal auditors conduct audits based on a check-list of Sustainability parameters derived from the SA8000® standard, from Pirelli Policy on Social Responsibility for Occupational Health, Safety and Rights, and Environment and the Group Ethical Code. Looking at the last three years, in 2012 the Internal Audit function carried out audits in Italy, Brazil, Argentina, Venezuela and Turkey, in 2013, in Argentina, the United States, Romania and Brazil, and in 2014 in Italy, the United Kingdom and China. In 2015 audits will continue in Egypt, Russia, the United Kingdom and Mexico.

The non-compliances that emerged as a result of the audits mentioned above were the subject of the action plans agreed between the local managers and Central Management, and will be subject to follow-up in 2015 by the Internal Audit Department.

It should be noted that none of the audits revealed any breach of ILO Core Labour Standards, with specific reference to forced labour or child labour, freedom of association and bargaining, and non-discrimination.    

LABOUR AND SOCIAL SECURITY LAWSUITS

In 2014, as in the past, the level of work and social security litigation remained low, thanks to a continuing trend of conflict avoidance, substantially in line with previous years.

Just as in previous years the level of litigation remains high in Brazil, to the point of representing about 90% of all the labour lawsuits currently pending against the entire Group. Labour lawsuits are extremely common in this country and depend on the peculiarities of the local culture. As such, they affect not only Pirelli but also the other multinational companies operating there. Labour lawsuits are generally initiated when an employment contract is terminated, and they usually involve the interpretation of regulatory, legal and contractual issues that have long been controversial. The Company has made a major commitment both to prevent these disputes – to the extent possible within the previously mentioned cultural context – and resolve them, including use of settlement procedures.   

UNIONISATION LEVELS AND INDUSTRIAL ACTION

It is impossible to exactly measure the consolidated percentage of union membership at Group companies, since this information is not legitimately available in all countries where Pirelli has a presence (over 160 countries on five continents). However, it is estimated that about half the Group’s employees are trade union members.

The percentage of workers covered by a collective bergaining agreement, in 2014 stood at 79%. This figure is associated with the historical, regulatory and cultural differences between each country.

Collective bargaining agreements were renewed without conflict or strikes.

The labour unrest in 2014 refers exclusively to Italian industrial sites supporting union actions on national issues of political/union relevance (e.g. reform of the labour market)   

OCCUPATIONAL RETIREMENT AND HEALTH-CARE PLANS

Defined benefit plans are in place in the United Kingdom (the fund was closed for all employees on the payroll as at 1 April 2010), in the United States (these plans were closed a number of years ago to employees on the payroll, in favour of defined contribution plans; since then, they only apply to retired employees but are not tied to wage increases) and in Germany (this scheme was closed to new hires in 1982). Other defined benefit plans exist in The Netherlands, but they represent a relatively insignificant liability for the Group.

Group affiliates provide supplemental company medical benefits according to local requirements. These healthcare schemes vary from country to country in terms of allocation levels and the types of coverage provided. The plans are managed by insurance companies or funds created ad hoc, in which the Company participates by paying a fixed amount as is done in Italy, or an insurance premium as is done in Brazil and the United States.

For the economic-equity measurement of the above benefits, reference is made to the Consolidated Financial Statements, Notes 23 - Employee benefit provisions and 32 - Personnel expenses.