Tata Steel pays bonuses worth £25 mn to European managers

Move likely to rankle workforce who voted to approve closure of a 15 bn pounds retirement scheme

Tata Steel, the country’s largest steel producer, has paid loyalty bonuses totalling about 25 million pounds to its top European managers, months after the UK workers accepted a pension cut to keep its British business alive. According to the Financial Times, “retention” payments were made to 100 high-ranking managers across Tata’s UK and Dutch operations. 

The move is likely to rankle the workforce of Britain’s largest steelmaker who voted to approve the closure of a 15 billion pounds retirement scheme in February in a bid to save the Port Talbot steelworks in south Wales. The compromise was part of a package aimed at safeguarding thousands of jobs in a bedrock industry that was on the brink of collapse only last summer. Tata Steel is said to be contractually bound to pay the bonuses. In a letter to employees on Wednesday, Tata Steel Europe Chairman Andrew Robb said that as per the contract, the company offered “a range of short- and long-term incentives for employees at all levels, so it can attract and retain the appropriate skills for the future.” 

The company in 2015 recognised that previous long-term incentive plans were not working and “there was great concern about the significant increase in the number of senior managers, particularly in the UK, leaving the business”. This resulted in a new plan and payments were made this financial year, which will be disclosed “through [its] normal reporting process.”

Calls made to the company went unanswered.

Meanwhile, spokesperson for the Community trade union said, “If these reports [about the loyalty payments] are true, then Tata Steel managers should hang their heads in shame.”

According to people briefed on the matter, senior executives at the Indian steel group admitted payment of retention bonuses when the company was challenged internally in the past few weeks, after the information was leaked by a Dutch whistleblower.