Published On: Wed, Dec 18th, 2013

VBC: ‘Rescue businesses and adjust severance pay’

UTS_logoWILLEMSTAD – The Curacao Business Association (VBC) opposes the current system of severance pay. The reason is partly the redundancy scheme at the public company United Telecommunication Services (UTS). This company is saddled with skyrocketing costs for necessary changes to take effect, according to the VBC.

The cantonal court formula used for severance pay is approximately equal to A x B x C. A represents the weighted count of service determined by the number of years worked and results in the benefit period expressed in months. In the cessantia act,  the result is expressed in weeks. B is the reward per month (gross salary and fees). C stands for the correction factor. This ranges from 0 to 2 percent or higher, and is determined by the court.

48 million

The association is concerned about reports that UTS should come up with 48 million guilders for 200 people in the next two to two and a half years. "This implies an average reward of 8,000 guilders per month (an average that is many times higher than most companies in Curaçao), which then assumes a neutral correction factor (C = 1)," according to the VBC.

Local law

The association wonders why Curacao uses a month as a unit of account instead of a week, as the cessantia act prescribes. "Would not (in principle) be more correct that the court would adhere to local laws instead of adopting and applying case law from the Netherlands?"

"Lucrative severance amounts'

The association has serious doubts about the redundancy premiums in relation to labor. According to the VBC the reward structure is completely skewed. “The price which UTS (read: society) has to pay now for these un-businesslike approach is very high.” The VBC fears that a precedent is created which complicates further restructuring in other public companies. “If the space required to implement restructuring is not provided in order to survive, then there is not much left but to follow the application of the cold turkey method or bankruptcy. For any party, this is an attractive alternative.”

For more information on the Cessantia Act please click here

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