Flashing stop signs on a parked row of American school buses.
Labour rights concerns at National Express’ US subsidiary: An investor view
Companies often declare in their annual reports that ‘people are our greatest asset’, yet the way that they behave in practice sometimes calls this into question. In a business like Durham, the US schoolbus operation of National Express, effective management of its people is critical.
For a prolonged period we have heard complaints from Durham employees and their representatives that their rights are not respected, and we have sought to understand what is really going on. It may disappoint the TUC to hear this, but we take no view on the rights or wrongs of union recognition, and believe this can only be a choice for employees themselves. But as investors we do want to be sure that high standards are being adhered to, and that companies are not running unnecessary risks as a result of the way they manage their people.
LAPFF has engaged with many companies over labour issues in the almost 25 years of our existence. That experience has given us a pretty good idea of when complaints about a company’s approach to workplace rights have a ring of truth to them. In the case of National Express, after several years of engagement, involving different members of our executive, we reached the conclusion that something was not right.
Some of the material that has been distributed in the Durham business seeking to dissuade employees from exercising their right to union representation is simply not we expect to see from a major listed company. And some of the individual cases, such as the firing of a union member on the day of a union election, make it hard to take seriously the claim that there is not an anti-union culture.
In response to such issues, it is not enough to claim that the business operates within the limits of domestic employment law, and that US industrial relations are more combative. We don’t believe a company that has good relations with its workforce in the UK should take a different approach when operating abroad.
There are risks for us as shareholders here. Given the cost of recruiting and training skilled staff, poor employment relations risk high turnover. Getting a reputation as an anti-union company (something we believe may start to stick to National Express) may make it harder to win or retain business, and not just in the US.
For these reasons we have decided to file a resolution calling for relatively modest reforms – the expansion of an existing board committee to take responsibility for the oversight of human capital policy, the adoption of policy based on recognised standards, and regular reporting to shareholders.
These relatively small changes would, we believe, give the National Express board the mandate to make sure Durham employees really are treated fairly, for the benefit of the business, its shareholders and it employees.