Nortel Pensioners Seek Resumption of Benefits Payments

A group of former employees and pensioners from Canada's Nortel has asked a court to order the firm to resume benefits payments, including severance pay and pension supplements. Nortel ceased the payments when it went into bankruptcy protection and is claiming that they are unsecured claims and will have to be paid out of any proceeds left when the firm emerges from bankruptcy protection.

The former employee's lawyer argue that Nortel is breaking Canadian law by refusing to make the payments.

A statement by the Canadian Car Workers union, which represents some of the retired workers says that "payments are not made for the benefit of any single individual, but pursuant to the Collective Agreement with the Union. Neither the CCAA nor any authority of the Court can authorize Nortel to breach the Collective Agreement in the manner which Nortel is doing."

Nortel's head of employee relations,  Lewis Lockhart says in a court filing that making the requested payments would lead to union members receiving preferential treatment under the restructuring plans.

"When an individual retires from Nortel, whether they were unionized or not as employees, they simply become Nortel retirees," Lockhart wrote in the filing. "There is no reason to treat formerly unionized retirees preferentially."

The court is due to resume hearing the case tomorrow (Mon 20th April).

Posted to the site on 19th April 2009