2020 GROUP SUSTAINABILITY REPORT



Supporting sound labour relations

Why it's material

We believe open lines of communication between ourselves and organised labour are vital to achieving our ambitious growth and value creation objectives. We continue to endorse the principles of fair labour practice as entrenched in the United Nations Global Compact and the Universal Declaration of Human Rights. At a minimum, we conform to and often exceed, the labour legislation requirements in countries in which we operate. Sappi promotes freedom of association and engages extensively with representative trade unions. Globally, approximately 57% of our workforce is unionised, 75% belonging to a bargaining unit.

How this issue links to other aspects of our business

Our global priority SDGs

 

Our top ten risks

  • 1 Safety
  • 2 Cyclical macro-economic context
  • 8 Employee relations

Our strategic fundamentals

  • Drive operational excellence
  • Sustain our financial health
  • Enhance trust

The global forces shaping our Thrive25 strategy

  • Continued erosion of trust in business, coupled with increasing social activism
  • Changing consumer and employee profiles

Our approach

We focus on maintaining constructive relationships with trade unions, believing that this is essential to long-term sustainable development. Discussions range from remuneration issues, to training and development, health and safety and organisational changes.

Read more: Our key relationships: unions.


SEU

Approximately 63% of SEU employees belong to a union.

Negotiations occur at the various country and industry-specific Collective Labour Associations, and the contract terms range from one to two years. The labour framework in Europe consists of Works Councils and collective labour agreements that differ from country to country. Works Councils are elected every four to five years at each mill site as well as the sales offices in Germany, Austria and the Benelux countries. Within the collective labour framework, Sappi is represented by industry employer representatives.

Meetings with the Works Councils take place twice a year with representatives from each manufacturing site and the Chief Executive Officer for the region and regional Human Resources Director. The purpose of the meeting is to share information and consult on topics of interest such as business performance, planned business changes, industry development and pan-European topics.

SNA

In North America, 61.4% of our employees are unionised. Our workforce is represented by 12 collective bargaining agreements covering each of the plant sites. The majority of our hourly employees – generally production unit employees – are represented by the United Steelworkers (USW) union, but employees are also represented by various craft, guard and railroad unions. In this region, labour agreements are usually for three years.

SSA

Union representation stands at 51%. The recognised trade unions with which we engage are: CEPPWAWU (The Chemical, Energy, Paper, Printing, Wood and Allied Workers Union); Solidarity; the Association of Mining and Construction Workers Union (AMCU) and the National Union of Metal Workers of South Africa.

Our wage negotiations with recognised trade unions take place at the Pulp and Paper and Sawmilling Chambers under the auspices of the Bargaining Council for the Wood and Paper Sector in South Africa, and our agreements are generally annual. Shortly after year end, we will make a decision on whether we will continue to engage with the latter or to move to company level engagements going forward.

The complexity of the work environment in our South African operations is compounded by the number of labour legislative requirements. Against this backdrop, we have established a number of forums with our shop stewards and trade unions with a view to sharing information and discussing matters of mutual interest as well as working together on matters that pertain to Sappi specifically and not to the industry as a whole. These forums include:

  • The National Employment Equity and Skills Development Forum that meets quarterly and is attended by union officials from three unions, shop steward representatives and management representatives. The primary focus of this forum is to mutually agree on the employment equity plan and Workplace Skills Plan as submitted to the Department of Labour and to the Fibre Processing and Manufacturing Skills Education Training Authorities
  • Shop Steward Forums at each mill that meet with management to discuss mill-specific work issues and conditions
  • The Partnership Forum, a joint union and Sappi senior management, meets quarterly to share information on business performance, strategy direction, industry developments and union priorities
  • The Pulp and Paper Chamber, an industry body that deals with wage negotiations and other employment relations and conditions of employment issues affecting the industry. Currently the chamber has established a work group to investigate a collective bargaining framework in an attempt to enhance the collective bargaining process in our industry

Key developments in 2020

In SEU there was an industry-wide strike in Finland that affected Kirkniemi Mill, and that lasted 15 days for blue-collar employees and 24 days for white-collar employees. In order to resolve this strike, an industry-wide collective bargaining agreement was entered into, requiring us to waive three extra days of work per annum that were negotiated years ago in exchange for shortening the summer stop and cutting other Collective Labour Agreement (CLA)-related benefits to achieve a cost-neutral outcome.

The consultation process related to the closure of the PM1 at Stockstadt Mill and impact on 170 positions was successfully completed with the assistance of the employee representatives and facilitator at the mill. The machine was closed from October 2020.

In SNA, the overall industrial relations climate in SNA was satisfactory despite furloughs due to Covid-19, the decision to close PM9 and certain biomass energy operations at Westbrook Mill and some contract negotiations with the Westbrook United Steelworkers (USW) union regarding relative to proposed changes in the union medical plan. The membership ratified the package shortly after financial year end.

In terms of the asset closures at Westbrook Mill, we entered into 'effects bargaining' with the USW and other trade unions whereby a voluntary severance package, equal to that which was bargained for union employees that were involuntarily retrenched, was made available to employees who accepted voluntary retrenchment. This was offered to encourage those union members who were close to retirement to consider the benefits of taking the package, thereby enabling employees with less seniority to remain with Sappi. Due to voluntary resignations and other attritions prior to the discontinuation of these operations, the number of active employees losing their positions was significantly lower than originally anticipated.

In SSA, collective bargaining was extremely tough. The Pulp and Paper Sector was unable to reach an industry settlement as parties deadlocked and unions issued a notice to strike following a balloting process. The strike, which began on 05 October 2020. The strike was generally peaceful except at Saiccor Mill where the company experienced sporadic incidents of violence, largely driven by the various community groups. SSA reached a settlement of 3% increase on basic wage with labour at company level backdated to 01 July 2020, and a further 1% with effect from 01 January 2021. This represents an overall increase of 3.5%. Shift allowances remained at 10.5%, which is still 0.5% ahead of the industry.

At year end, sawmilling wage negotiations were still underway at industry level with forestry negotiating at company level.

Our forestry and sawmilling sector wage negotiations were concluded without a strike. For forestry, we settled on a 3% wage increase backdated to 01 July 2020, with a further 1% increase coming into effect from 01 January 2021. Regarding sawmilling, we settled on a 3% increase backdated to 01 July 2020.

Ensuring disciplinary procedures enhances trust

Disciplined behaviour is essential not only for individual well-being, but also to ensure our group goals and objectives. In each region, disciplinary codes ensure disciplinary procedures, while grievance policies entrench the rights of employees, including the right to raise a grievance without fear of victimisation, the right to seek guidance and assistance from a member of the Human Resources department, or their representative, at any time and the right to appeal to a higher body, without prejudice.

We have identified no operations or significant suppliers where the right to exercise freedom of association and collective bargaining has been violated or is at significant risk. We have identified no operations and significant suppliers as having significant risk for incidents of child labour. Similarly, we have identified no operations and significant suppliers as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of all forms of forced or compulsory labour.


Communicating operational changes

As one of our strategic fundamentals is to enhance trust, we believe it's important for all our people to understand and trust, our processes for communicating operational changes. These are of key concern to all employees, particularly those represented by trade unions or bargaining units.

In terms of career endings, access to retirement planning services is provided on a regional basis and, in some instances, this is supported by financial well-being programmes. To the extent that there are employee lay-offs, we provide severance pay to all employees and, in some instances, outplacement assistance. Overall, we aim to communicate any changes to our people timeously and transparently.

Across all countries, information about significant operational changes should be provided at a time when planned changes are concrete enough to inform about reasons for changes, planned measures with impact on employees, number of affected employees and timing, but early enough to still enable proper consultation.

In SEU, information about significant operational changes is only communicated when these are concrete enough to enable proper consultation where the process followed is according to a set timeline.

In SNA, the notice period in terms of federal law is 60 days. Details on operational changes are not specified in collective bargaining agreements.

In SSA (including Sappi Limited), the implementation of significant operational changes is governed in terms of section 197 and section 189 of the Labour Relations Act, 66 of 1995. The act does not prescribe a specific notice period. However, the standard practice is a minimum of 30 days, and a maximum of 60 days' notice for consultation of a large-scale restructuring process. The recognition agreement concluded with the majority union, Chemical, Energy, Paper, Printing, Wood and Allied Workers Union (CEPPWAWU) recognises the provision of the act in this regard. SSA is party to the bargaining council for the wood and paper sector as well as forestry in South Africa. In the case of sawmilling and pulp and paper, collective bargaining is conducted at industry level under the auspices of the bargaining council. The constitution specifies when parties should submit issues of bargaining for the particular year and when the negotiations must commence. Forestry conditions of employment are implemented on 01 April every year and regulated by ministerial sectoral determination. The normal notice period applies.

Most of the countries in which Sappi Trading is based are not covered by collective agreements except for Austria, Brazil and South Africa. In Austria, the notice period follows labour law and individual employment agreements. In the case of senior and general staff, notice periods of four and three months respectively are required. Based on local legislation, these notice periods increase according to years of service. A notice period is not set up in collective labour agreements. In Brazil, a minimum notice period on operational changes is required for large companies, but there is no particular need to communicate to unions in advance.