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Clash over Sheraton’s Services Charge Sharing Continues

Labour leaders want Ethiopian senior management to stop sharing in service charges


Solomon Getaneh (left) and Mesfin Mitiku, secretary and chairperson (respectively) of Sheraton Hotel’s labour union, held a press conference along with other labour union representatives, on Thursday, February 3, at the office of FETU. Jean Pierre Manigoff (right), general manager.

Who is entitled to sharing proceedings from service charges at Ethiopia’s most luxurious hotel remains a bone of contention between its management and labour union leaders, which has led to temporary interruption of negotiations, last week.

Senior managers of the Sheraton Addis and leaders of its newly formed labour union have been locked into an otherwise bitter dispute since December 2010. Although both parties have thrashed out some of the 46 provisions in the collective agreement they are negotiating on, disagreements over the entitlement of service charges remained unresolved when they met on Tuesday, February 1, 2011 Solomon Getaneh secretary of the labour union said.

Both parties were mediated by Kidus Teshome and Biniam Taddese of the Addis Abeba Labour and Social Affairs Bureau, since January 7.

Salaries, bonuses, and service charge payments differ sharply. While the management, under Jean Pierre Manigoff, has proposed salary adjustments, the labour leaders have their own ideas about how big an increase the more than 840-member labour force deserves.

Both sides are hoping to continue discussions on the issue next week, according to those close to the negotiation.

What seems a thorny issue that is dear to both sides is the sharing of 10pc service charges collected from customers of the hotel. It exceeds an average of four million Birr per month. A labour force that feels underpaid does not consider service charge payments, which are equally distributed among all employees, a part of its basic salary.

The amount employees take home at the end of the month is of the highest in the country, argued the management, which hands out an average monthly amount of 5,337 Br to each employee, including benefits.

Some members of the management should not be included in sharing of proceeds from service charges, argued said the labour union leaders.

“The service charges have been equally shared among all Ethiopian staff ever since the hotel’s establishment,” Manigoff said, in a text message sent to Fortune.

The general manager, who is being confronted with an unruly labour force for the first time in the 12 years he has been managing the hotel, declined to comment further, as negotiations are ongoing.

The hotel has close to 19 expatriate management members who are not included on the list of those who share the service charges.

However, there are 12 Ethiopian senior management staff members who each take service charge payments that reduce 52 Br from an average employee, argued members of the management team who requested anonymity.

Labour leaders stood their ground, fighting for these managers to stop sharing in the service charges.

“The labour union has agreed to concede on the issues of annual salary increments and bonuses, hoping to achieve a concession on service charges,” Solomon told reporters at a press conference given by labour leaders, on Thursday, February 3, at the office of the Federation of Ethiopian Trade Unions (FETU).

The two sides, which do not include the general manager for the negotiations conducted in Amharic, have locked into a disagreement over the definition of “concerned employees” deserving to share service charges as stipulated in the collective agreement, sources close to the negotiations told Fortune.

There is a sharp difference of views between the negotiators. Labour leaders argued that “concerned employees” mean those covered under the collective agreement, while the management argued that a failure to include them in the sharing of service charges would amount to violations of the terms of their contractual agreements.

Each employee, with the exception of expatriate staff, is hired with contractual rights of entitlement to service charges and benefits such as healthcare, according to senior managers of the Sheraton.

The negotiations with the management have never been easy, claimed Gessese Abegaz, president of the Federation of Hotels and Tourism Employees Trade Union (FHTETU).

“They have begun denying the labour union its benefits after it was established,” he said at the press conference. “The management knows that service charges are the largest part of the employees’ income.”

The turn of events saddened the federation, according to Gessese, who plans to talk to the Confederation of Ethiopian Trade Unions (CETU) so that the management will continue negotiations on the collective agreement.

Kassahun Follo, president of the confederation, visited Manigoff late last week in an effort to persuade both parties to resume the talks, out of which labour leaders walked, last week.

This had angered Mohammed Ali Al-Amoudi, the owner of the hotel, who felt unappreciated and unrecognised for his generosity to employees of the hotel, senior managers at the hotel told Fortune.

The owner is now contemplating to shut down the hotel for two years in order to start its planned expansion in the direction of the Ministry of Foreign Affairs (MoFA), an idea senior managers at the hotel claimed was put on hold until a decision was made about the alternative of launching construction adjacent to the existing hotel while it remained open for service.

This news created panic among employees last week, for some understood it to be in retaliation of their defiance of the management.

“Management cannot decide to shut down the property,” said a senior manager at the Sheraton, who requested anonymity due to the sensitive nature of the dispute. “Only the owner has that right. This has been an issue for as long as the plan to undertake the second phase of expansion on the hotel.”



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