Telus seeks to freeze wages amid Shaw threat, downturn

Vancouver firm proposes lump sum payments

Telus Corp. is trying to impose a three-year wage freeze for thousands of its employees as the Canadian wireless carrier works to control costs amid renewed competition from Shaw Communications and the economic downturn in Alberta.

Telus is proposing lump-sum payments instead of annual wage increases for the first half of a sixyear contract, according to bargaining updates from the Telecommunications Workers Union. The one-time payments would range from $8,500 to $19,000, according to a Sept. 15 union update.

The labour talks come as Canada’s third-biggest telecommunications company is juggling a long list of challenges, including increased competition from Shaw Communications on wireless and home Internet service. It also pledged to increase dividend payments to shareholders while investing $2.85 billion this year alone in network improvements.

“I understand why they’re trying to take this strategy, giving themselves cost certainty for the next three years,” said Greg MacDonald, an analyst with Macquarie Group Ltd.

Offering lump sums allows companies to freeze base salaries over multiple years instead of letting them compound with annual percentage-based raises. The tactic has been used extensively in the auto industry to control costs, especially after the 2008 financial crisis.

Telus is offering two per cent annual wage increases over the final three years of the contract, according to the union update.

“That is standard operating procedure in a general environment where you’re trying to squeeze as much out of your limited financial mandate as possible,” said Craig Rix, a labour and employment lawyer with Hicks Morley in Toronto.

Though he’s not aware of the details of the negotiations, a six-year contract suggests Telus is trying to ensure labour stability, Rix said in an email. “The union may well be looking for trade-offs in exchange for a term that long,” he said.

The union says it remains “strong in our belief that we can reach a tentative agreement,” according to the update on its website. The union represents more than 10,000 Telus employees, or almost a quarter of the workforce, including customer service staff and repair technicians.

Bob Gallagher, a spokesman for the union, declined to comment beyond the posted updates. Shawn Hall, a Telus spokesman, declined to comment. The last Telus contract expired in December.

Telus’ lump sum proposal also includes payment in exchange for less overtime pay and the loss of an extra “float day.” The union has yet to bring Telus’ offer to its membership because it said several of the company’s proposals contradict Canadian labour laws.

It asked the federal labour board to rule on some of the proposals before bringing it to employees for a vote, according to the update.