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GORENJE (GRV): Gorenje, d.d., Management Board response to the announced strike

UNI - EN REPORT No11/2018

Pursuant to the provisions of the Rules and Regulations of the Ljubljana Stock Exchange d.d., Financial Instruments Market Act (ZTFI), and the Corporate Governance Code of the Ljubljana Stock Exchange and Warsaw Stock Exchange, the company Gorenje d.d., Velenje, hereby makes the following announcement:

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On February 22, 2018, Gorenje Management Board was informed that the representative trade union SKEI Gorenje was planning a warning strike for March 14, 2018. The reason for the strike is that the Management Board terminated, effective as of February 1, 2018, the company collective labour agreement.

While the Management Board respects the employees' right to strike, and we will enable the organizers to assert such rights pursuant to the relevant regulations, we find the strike entirely unnecessary and unwarranted. In the negotiations on the comprehensive revision of the collective labour agreement to date, we have made great progress, and the Management Board is willing to negotiate and seek a compromise. Therefore, we invited the trade union immediately after the termination of Gorenje's collective labour agreement to continue the negotiations and to find a way to draw up a new, comprehensively revised collective labour agreement that is compatible with today's conditions in the society and in the market. Gorenje's company collective labour agreement effective until recently dates from 1991. It was drawn up in entirely different circumstances and it is in dire need of a considerable update. At the same time, termination of the company collective labour agreement is a legitimate and legal decision by any party to such agreement – the employer or the employees – and its termination does not take away any rights from the employees at this time. Despite the termination, the agreement shall remain in effect for 6 months, and its provisions shall be effective for further 12 months thereafter unless a new company collective labour agreement is signed earlier. Thus, employee rights shall remain unchanged until August 2019.

And these rights are considerable. The salaries of Gorenje employees are about 10 percent higher than specified in the industry collective labour agreement; annual bonus for years of service and loyalty (i.e. years of service with Gorenje) is higher by two thirds. In addition, the company collective labour agreement offers employees preventive medical examinations and therapy at the employer's expense, co-financing of sports activities as a part of the sports society, cultural activities, additional education and training, and co-financing of additional pension insurance. For workers with the lowest income, we even finance it entirely. The employer's representatives left most of these rights intact in negotiations; rather, they wished to maintain them in the same scope, despite the fact that they exceed the standards and represent a major expense for the employer.

In spite of the Management Board's willingness to find a solution and engage in constructive social dialogue to push the negotiations from a deadlock in which they have been for nearly two years, we now find ourselves in an unusual situation. Normally, upon termination of the collective labour agreement, the trade union escalates the situation – e.g. by announcing a strike – to force the employers to negotiate a new collective labour agreement. At Gorenje, the situation is in fact reversed. The Management Board is offering and inviting to negotiate, while the trade unions refuse to do so and seek to aggravate the situation, demanding that the Management Board revoke by March 14 its termination of the collective labour agreement.

Despite the ultimatum, the Management Board will not revoke the termination of the collective labour agreement. As explained several times, a step back from the point from which there has been no progress for two years, is not the right direction for us as we look to ensure Gorenje's further development. The only acceptable direction for us is forward, i.e. to continue the negotiations upon a solid foundation that has been built through years of social dialogue by the negotiation task force, and to quickly find a solution to adopt a comprehensively revised collective labour agreement. It is no less than Gorenje's future that is at stake, and this includes the company's long-term stable development and retention of jobs. This, however, requires a solid base, and an all-around overhaul of the collective labour agreement would be an important step in this direction.

It is important for all Gorenje stakeholders to be aware of our responsibility for providing a bright future for the company, as well as favourable strategic, business, and financial conditions in the society, the company, and the corporate group. All our actions have long-term effects that will be felt for years and decades to come, regardless of any short-term benefits or interests.

Disclaimer: The English text for all announcements is for information purposes only!

The information included in this announcement will be available at the official website of the company Gorenje d.d., Velenje, at www.gorenjegroup.com, for a period of no less than 5 years from the date of announcement.

Gorenje, d.d., Management Board

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