TORONTO — An Ontario court has dismissed an appeal from a union representing current Nortel Networks workers, as well as laid off and retired employees who are seeking payments from the insolvent company.
Appeals court Judge Stephen Goudge wrote in his decision on Thursday that a collective labour agreement between Nortel and its union only applied to current employees at the company, and not retired workers.
The Canadian Auto Workers union and former Nortel employees had insisted that the agreement covered both the 45 current workers at the company, and those who were retired or were laid off last year before the company filed for bankruptcy protection from creditors.
They argued that retired workers who left the company ahead of its January creditor protection filing should continue to receive termination and severance payments in addition to monthly retirement payments. The union argued that Nortel was breaking labour laws by refusing to do so.
The dispute centres on Nortel’s restructuring under bankruptcy protection laws in Canada and the United States and the company’s financial obligations to employees it has laid off as it slowly winds up its operations.
“Can it be said that the payment required for the services provided by the continuing employees of Nortel also extends to encompass the periodic payments to the former employees in question in this case?” Goudge wrote in his decision, speaking on behalf of a three-person panel.
“In our opinion... the answer is clearly no.”
Former employees who were let go in a downsizing that began in late 2008, and others that were laid off since the court filing in mid-January, have been fighting to get severance payments that had been part of their separation packages.
After the bankruptcy filing, Nortel workers who lost their jobs, severance payments or pensions are considered lower level creditors and typically receive their payments if any money is left after repayment of debts owed to the banks, trade creditors and bondholders.
The court’s dismissal followed an initial ruling in the Ontario Superior Court in June, which also denied the request by the union and workers.
To add to the employees’ woes, a media report Thursday said that Nortel approved a plan this fall to give some of its top managers raises.
CBC News reported it obtained an internal corporate document that indicates increased compensation was approved for 72 Nortel executives in the form of salary, investment or bonuses.
The CBC reported that 14 of those executives were to get compensation of $500,000 or more.
Nortel confirmed a new compensation scheme had been approved but would not confirm specifics, the CBC reported.
Nortel, the former Canadian technology heavyweight, filed for creditor protection in January, and has been auctioning off its assets since the summer.