QinetiQ tells staff: reject redundancy deal and the next one will be worse

Leo Quinn, the new chief executive of the defence technology company QinetiQ, has warned staff that if they reject proposed lower redundancy payouts, any future offer will be "a lot worse". Announcing a major restructuring of the company, he said that a round of job cuts would see operating costs cut by 10%, adding that the company, which was created out of the government's defence research agency, had not fulfilled its potential since being privatised seven years ago. However, he warned that the firm could not afford to make redundancies on existing terms, which are extremely generous and reflect the company's public sector origins. About half the UK workforce, which numbers 6,500, have been at QinetiQ since before 2001 and are entitled to a maximum of 160 weeks' redundancy pay. The rest of the workforce would receive up to half that. QinetiQ has proposed cutting the maximum payout to 15 months' salary or £90,000, whichever is lower. The Prospect union, which represents about 2,000 of QinetiQ's UK workforce, is balloting members next month on the offer. Quinn said that the company had "contingency plans" in place if it was rejected. David Luxton, national secretary of Prospect, said he feared that this would involve the company trying to persuade individuals to accept the lower terms, and if this failed, to dismiss staff and re-employ them under new contracts. "Our preference is to achieve a negotiated settlement," he said. QinetiQ declined to comment on what its contingency plans would be. Quinn added: "It's the best deal they can get. It's very favourable for a quick settlement – if it starts to run into time it will be the case that any future deal will be very different and a lot worse." He said it would be unfair on remaining staff for those who are made redundant to receive payouts on existing terms. "The debt for these payments goes onto the balance sheet. Employees who remain have to shoulder the burden. That is not fair." Prospect has not recommended its employees either to reject or accept the offer, but has urged the company to be as fair as possible and consult meaningfully with staff. Quinn said that QinetiQ's revenue would fall for the next two to three years as a result of falling military spending in the UK and US and as the company restructures. The dividend was also suspended for a year. Quinn said that QinetiQ, which has made 20 acquisitions in seven years, had overloaded its balance sheet and committed itself to a number of unsuitable low-margin contracts. For example, it rewires entire planes for the RAF, which is highly labour-intensive. He believes QinetiQ should be exploiting its technical expertise more, as when it advised the Ministry of Defence on how to refit its Sea King helicopters for the altitude and heat of Afghanistan, then project-managed the work. "QinetiQ has not modernised at the rate it should have done," he said. "Particularly in areas around commerciality."