Disabled Nortel Employees Lose Out

Robert Meynell
Government Relations Associate for March of Dimes Canada
Toronto Star, Oct 25 2009

As Nortel divvies up its assets and former CEO Mike Zafirovski paws for $12.3 million (U.S.), employees on long-term disability are forgotten and abandoned, providing yet another example of how more than 40 per cent of Canadians with disabilities find themselves earning less than $10,000 per year.

Imagine that you have a good job at Canada’s premiere telecommunications manufacturing company. You choose to make regular contributions to your company’s long-term disability (LTD) benefit plan because, while you are unlikely to ever need it, you don’t wish to risk finding yourself living in poverty or possibly institutionalized as a result of an accident or disease.

One day Fortune knocks, recruiting you into the world of the disabled.

Though you’ve lost much, you are thankful that you’re not also left penniless. Then you receive a letter from your employer informing you that, regrettably, your LTD plan was not really covered by an insurance company and when the business evaporates so will your paycheque.

This financial spiral is the reality faced today by the 409 people on LTD at Nortel, except that they have yet to receive the letter. Indeed, Nortel’s lawyers are not disclosing much.

It turns out that while Sun Life administered the LTD payments, most of the money came from Nortel’s operating revenue, which means that if Nortel stops operating, those on disability are on their own.

Unlike Nortel’s 17,000 retirement pensioners, the law does not require Nortel – or other employers that do not insure liability benefits (the majority of them) – to keep the money in trust for those on disability. And unlike the tens of thousands of other Nortel employees who have lost their jobs, those on disability leave are unable to find new employment.

In the United States, France and Britain, there are statutes that protect LTD beneficiaries but Canada has no federal or provincial legislation that protects those who are most in need. Corporate directors get their bonuses. Lawyers and secured creditors walk away with full pockets. Pensioners are hurt (possibly losing more than 30 per cent of their pension) but still afloat. But the 409 people on disability may be left with nothing.

These are the most vulnerable. They are unable to work. Many are still trying to meet the cost of raising a family and they have not had the years in the workforce to build a substantial amount of savings. And their small number compounded with their disabilities render them ill-equipped to mobilize a strong defence of their rights in the face of what can only be called systemic discrimination.

Some may wonder why this amounts to discrimination when nearly everyone associated with Nortel is being hurt financially in one form or another.

True, thousands have taken a financial hit, but only the 409 on disability are being driven into almost irreversible poverty.

The collapse of Nortel is neither the first nor the last time that corporate bankruptcy in Canada will throw the most vulnerable into poverty. We saw it with Eaton’s and Massey Ferguson. In the unsteady economy we face, we are likely to see it again soon.

But we should stop it here – and we can. We owe it to ourselves as a country that cares for its most vulnerable to press Nortel to honour its promise to those on long-term disability and call upon the federal government to reform regulations governing LTD pensions.

This is not a question of charity, it is a question of rights. In the LTD pension plans, Nortel promised financial security in the event that the employee acquired a disability. As Nortel dissolves, it must do its utmost to compensate each of the 409 people now relying on that promise. It was a pension they paid into and it must be honoured as a pension.

Reproduced from http://www.thestar.com/opinion/article/715590–disabled-nortel-employees-los