CRITICAL CONTRACT CLAUSES (#2A) – Mandatory Gainsharing Awards

Given the complexity of a good Incentive Awards article, we have decided to supplement the original Awards posting #2 about Suggestion Awards.  Today’s is about negotiating to give employees a guaranteed share of savings they help management achieve.  That is commonly known as “gainsharing” and can generate millions for employees through a strong contract article.

Gainsharing generally applies to joint employee-management efforts to save money where the employees are guaranteed a share of the savings for themselves.  FLRA has held that these programs are negotiable (See NAGE, 48 FLRA 1193 (1993)), and probably the most common area of spending to which it is applied in the federal government involves travel costs.  NTEU contract with IRS obligates the agency to run such a program.  You can access that contract through the “Compare Contracts” menu bar above (See Article 18).

Some agencies have established similar programs outside of contract negotiations.  For example, Agriculture’s Farm Service Agency implemented a program in 2007 that gives employees one-half of the savings from booking lodging while traveling that is below the maximum lodging amount.  It also gives them one-half of the price of an airfare when the choose to use their personal frequent flyer miles rather than bill the government for the flight.

The National Weather Service regulations give employees 50% of the money saved when they stay with a friend or relative while traveling rather than bill the agency for lodging.  They also get 50% of the savings from sharing a room with another agency traveler or they get a room at less than the federal contract rate for the city.

The program manuals for both those agencies provide unions with a good roadmap for structuring the program as does the IRS manual.

But, travel costs are not the only expenditure around which to negotiate a gainsharing program.  The program could be designed to reduce the costs of overtime, staffing, rent or production. Google is a good place to look for other areas in which gainsharing has been used and is a good source for examples of governmental use of gainsharing.

Unions need contract clauses that make creative use of guaranteed incentive awards of all kinds for employees.  Given that the programs pay out only if there are savings, the agency is guaranteed to gain as well if the negotiated program succeeds. There are several FSIP decisions involving union demands for gainsharing programs.  To date FSIP has found problems with every one of the union requests, but those decisions should be read to avoid the problems the Panel found in each.

About AdminUN

FEDSMILL staff has over 40 years of federal sector labor relations experience on the union as well as management side of the table and even some time as a neutral.
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