Qinetiq staff agree to changes in terms

Staff at defence research and technology firm Qinetiq have swallowed cuts to terms and conditions in return for pay rises, the company said.

Qinetiq, which has around 6,700 workers in the UK, is bracing itself for a major spending clampdown by one of its biggest clients, the Ministry of Defence.

The company said 75 per cent of staff had accepted less favourable redundancy terms and pension arrangements in a ballot by four unions, in return for a two per cent pay rise from next month. Some will also gain a 1.5 per cent rise backdated to last September.

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Addressing the legacy employment costs of the former public sector organisation is a key priority of new chief executive Leo Quinn. Job cuts are on the way at Qinetiq amid reports that 10 per cent or more of the UK workforce could be under threat.

Mr Quinn said the ballot result was an "encouraging endorsement" of plans to put the group back on a "more secure and stable footing" after successive profit warnings earlier this year.

He said: "Our goal was to find a solution that strikes a balance between an affordable and competitive pay structure for those who remain and one that treats those who leave as a result of redundancy fairly and with dignity."

The changes come as part of a two-year plan to cut costs, improve productivity and slash the group's 457.4m debt pile.

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The group – which supplies technology such as Talon robots used for bomb disposal and the new backpack-portable Drago Runner which can disarm explosive devices while under remote control – has been hampered by delays to contracts in the United States as well as uncertainty over UK defence spending.

Qinetiq was created out of the former Defence Evaluation and Research Agency, and floated on the stock market in February 2006, netting huge windfalls for its directors.

A National Audit Office report attacked an "excessive" share incentive scheme which netted Qinetiq's 10 most senior managers 107.5m – a return of 19,990 per cent for their 540,000 investment in shares – when private equity company Carlyle floated the firm.

The group has more than 40 sites in the UK, with facilities in Farnborough in Hampshire, Malvern in Worcestershire, Salisbury and Boscombe Down in Wiltshire, Portsmouth, Plymouth, Glasgow and Christchurch in Dorset.