Questions and Answers on Industrial Relations
WINDING-UP OF OCCUPATIONAL PENSION PLANS By Sylvan Wilson
 All plans are required to include numbers 13-15 of the said Regulations in the wind-up provisions of their respective Rules and Trust Deeds. This is of primary concern to Defined Benefit Plans as opposed to Defined Contribution Plans, due to the fact that most of the funds of the latter are contained in individual accounts of the plan membership. These points list three steps to be followed in the event of the wind-up of a plan: 1) Secure all pensions in payment at existing levels or in proportion, if the remaining funds are insufficient. 2) Secure pensions, either immediate or deferred, for all remaining members or in proportion if the remaining funds are insufficient. 3) In the event that there are still unapplied funds, they are to be used to increase benefits payable to the aforementioned groups. Most pension plans entrust these responsibilities exclusively to the Trustees and mandate that the listed benefits be secured via the purchase of immediate or deferred annuities. The passage of time, the phenomenal success of pension funds, the improvement in financial awareness and knowledge of workers etc. have exposed the serious deficiencies of these provisions. Occupational Pension Plans’ assets exceed TT$60 Billion and represent one of the major sources of long term financing and is a pivotal player in our country’s capital markets. It is one of the unheralded successes of workers and their trade unions in having the foresight and discipline to defer part of their wages for well over half of a century. It is for this reason that it is imperative that members must take a keen interest in the affairs of their pension funds. GOVERNANCE ISSUES ON WIND-UP During the life of a plan, once there is a corporate entity as Trustee, all plans are required to have a joint management committee. In most plans the Chairman and Secretary are drawn from the Plan’s Sponsor’s (Company) representatives. This means that whenever the Company ceases to exist (liquidation) or is unwilling or unable to continue as Plan Sponsor then there can certainly be no Company Representatives. The management committee, itself, that was elected and appointed in accordance with the rules of an on-going pension plan, ceases to exist. The Trustees then take control of the plan and together with their appointed Actuaries, Auditors, Valuators, Lawyers etc they make all the decisions and are paid first out of the funds under management. This was the case with the Arcelor Mittal pension plan when that company folded. It was only because of the struggles of the members and their union that the members got any voice in the proceedings. This is utterly unacceptable. The pension funds are the property of the members at all material times. The fact that the company ceases to exist does not negate this. Pension funds are held in trust by the Trustees, but the ownership and control by the members (owners) must never be lost. During the normal operations of pension plans, the joint management committee directs the Trustees and the Trustees advise the management committee. This relationship has worked well for decades. It is, therefore, critical that all plans must move with haste to amend their rules to have ALL members meet in the event that a wind up is to be triggered and have them elect a wind-up management committee with similar powers and rules that had previously existed. This is further accentuated when the process of securing of benefits and other wind up activities are examined. FINANCIAL ISSUES Most plans, in the process of winding up, prescribe that benefits be secured via the purchase of annuities. There are many critical issues which arise from this. 1) It is difficult for most insurance companies to individually absorb the business activities of the larger pension plans. Indeed, some plans’ balance sheets exceed that of the insurance companies. 2) The T&T capital market provides very limited trading opportunities and there are very few investments that are considered desirable. Therefore, different portfolios tend to have noticeable similarities as traders by and large keep the better options. This can then give rise to concentration and other undesirable risks. 3) Each insurance company will have its own view on its risk appetite, expectations on rates of return etc. They will also have different administrative costs and profit margins. These issues result almost always in the discontinuance costs of a pension plan being much higher than its ongoing costs. Therefore, a plan that is in surplus, if it were to continue as an on-going entity, could have a serious deficit if it were to be wound up. This is the case of the Petrotrin Employees pension plan if the annuities option were to be pursued. 4) If the pension plan’s assets were to be sold between two or more insurance companies who all have different rates, these different rates cannot be applied to the same assets of a single plan resulting in two members in similar circumstances receiving different benefits.Trying to resolve these myriad issues takes decades sometimes and it is the members who suffer while these deliberations are ongoing. While all this is going on, administrative and professional fees continue to be paid and there is no oversight by the owners of the fund. Members of pension plans, whether unionised or not, should ensure that the wind up provisions recommended here (see below) are included in their trust deeds and rules so that in the event of a wind up they would still have control over the operation of their plans and not cede that control to trustees, whose interests may not coincide with that of the members.The recommended provisions were developed by the National Workers Union, after extensive discussions with a number of trade unionists from across the trade union movement. |
ALL YOU WANTED TO KNOW ABOUT WORKMEN'S COMPENSATION
The power point presentation posted here was prepared for a workshop held on Wednesday 2nd May 2018 at the Barataria office of the National Workers Union, to deal with the question of workmen's compensation. Practitioners from several unions took part in the workshop along with those from the National Workers Union. |
| Attachments:
NWU Workmens Compensation.pptx
FROM ZERO TO INFINITY: ECA WANTS TO RESTRICT COURT’S POWER TO DEAL WITH UNFAIR DISMISSAL
FROM ZERO TO INFINITY: ECA WANTS TO RESTRICT COURT’S POWER TO DEAL WITH UNFAIR DISMISSAL The Employers Consultative Association (ECA) recently published an article in the Newsday of Thursday July 16th 2015. The ECA argued that in cases of compensation for unfair dismissal employers were at a disadvantage because the court can award from zero to infinity. The employers’ organisation called for legislation to restrict the power of the court to determine remedial action for unfair dismissal. The ECA called for legislation which stipulates remedies for wrongful dismissal and unfair termination. It cites the Kenyan Industrial Court which may reinstate, re-engage the worker, and/or pay compensation to a worker up to a maximum of 12 months wages. The ECA statement ends: “a company executive should be able to determine what is the likely compensation, thereby enabling him/her to take calculated action as to whether the matter should be settled or pursued in the Industrial Court. It is respectfully submitted therefore that in the interest of the community as a whole in which the employer is looked upon to provide growth through the creation of jobs, a remedial structure along the line of that provided by the Kenyan legislation would be most welcome in this jurisdiction” Dave Smith, General Secretary of the National Workers Union, commented that “a basic principle in civil disputes is that the winning party should, where possible, be put back into a position that they would have been before the offending action took place. if the employers can calculate in advance their maximum liability, then they can work out how much it would cost to arbitrarily dismissal "troublesome" (i.e. trade union) workers.”
“It has long been my view that the principle which the ECA is standing on here has been serving them well since my interest developed in this area some eight years ago. The general rule of thumb is that the Court structures compensation around service in the main. Using the one month salary for one year service and a possible add on for exemplary damages, employers have been doing exactly what they suggested above, i.e. “calculating” the likely cost to the business for a dismissal that is based on the corporate ego rather than for cause. They also have the added sweetener that such cost will undoubtedly be deferred by a dispute resolution system that guarantees years of relief to the offending party. Another such example is the awards granted for unfair dismissals during the probationary period. There seems to be “value for the period of probation” calculation being employed by the Court and has therefore given the necessary confidence to employers to continue without regard to process since it’s a “cheap” cost to bear. Our Comrade Don Devenish (Executive Officer of BIGWU) has recently however crushed First Citizens Bank with a $250,000 award for a unfair dismissal while on probation. Judgements like these are absolutely necessary if only to be sufficiently punitive to ensure that proper process is adhered to in a meaningful way ( i.e. not cosmetic) to give workers a fair chance. If I am to be totally objective, then I ask these question of the Court and the ECA: why hasn’t the quantity (overall) and frequency (repeat offenders) of harsh and oppressive dismissals been reduced to a trickle in the system, especially if we consider that the Industrial Court has been at it (delivering judgement after judgement) for the past forty plus years? Why hasn’t the Court instituted a system of “progressive discipline” for the employer who despite the availability of Human Resource and Industrial Relations expertise continues to offend /not learn from their same ‘mistakes’? Why is it that the numbers of matters are progressively increasing each year, so much so that matters are being already scheduled for March 2016 since June 2015? My view is the “system” is being abused by employers for their benefit, i.e. to dismiss without cause/process today and pay what they have already deemed as affordable much, much later. Zero to infinity seems a fair range in circumstances such as these. “ |
WHAT IS SUMMARY DISMISSAL
This feature is dedicated to practicing trade unionists whether shop stewards, branch officers or industrial relations practitioners at the Ministry of Labour, Industrial court, at the negotiation table etc. Questions about industrial relations issues should be sent to kangaz@workersunion.org.tt and we will attempt to address these questions as expeditiously and as comprehensively as possible. SUMMARY DISMISSAL What is a Summary Dismissal? - This is dismissal without giving the worker a hearing as opposed to progressive practices of industrial relations where a hearing of the charge is held and the worker is allowed a defence. Summary dismissal is supposedly predicated on the worker having committed an offence so grave that it goes directly to the root of the Contract of Employment. The Industrial Court is recent times has ruled against summary dismissals. As a result most unionized employers have adopted the practice of progressive disciplinary procedures. What is meant by an action going to the root of the contract of employment? This is when a party to the Collective Agreement violates a major provision of the Collective Agreement. Examples: Taking more leave of absence than what is provided in the agreement. Refusing to perform normal duties as provided in the job description. The employer maliciously failing to pay the worker on time or failing to pay the correct wages. What are progressive disciplinary procedures? - These procedures involve giving the worker the opportunity to be heard and to put up a defence to charges in the presence of his Union and or a witness before taking disciplinary action. The Industrial Court has on many occasions supported the practice of progressive disciplinary procedures |
What is a Constructive Dismissal?
This act is a disciplinary action taken against a worker which fundamentally alters the Contract of Employment. It is humiliating and designed to force the worker to resign from the company. Examples of constructive dismissals are: relieving the worker of normal duties or authority; sometimes giving the worker no job functions and therefore the employee is idle during work hours; having the worker perform duties below his standing and seniority or duties she/he is not trained for or able to perform. In some cases the worker is transferred to a remote area of the company's operations or given hours of work that inconveniences the family. In extreme cases the worker's job is declared redundant and the duties of the job are attached to another position or the job title is changed. All these actions of the employer are designed to force the worker to resign from the job. In most cases the worker retains his wage/salary and conditions. Does the worker have to leave the job to claim constructive dismissal? No! The matter can be handled as a genuine grievance. |
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