Railways ‘severance package’ could set a precedent

Press, 21 April 1986, Page 20

Railways ‘severance package’ could set a precedent

By

TIM DONOGHUE

NZPA political reporter Wellington

The Railways Corporation’s "voluntary severance package” scheme could set a new precedent for private sector redundancy claims. Specific details of the voluntary severance and early retirement offers to Railways’ staff have been outlined in a booklet to staff from the general manager, Mr Gordon Purdy. Mr Purdy outlined details of the package, which involved:

• Four weeks wages (based on a 40 hour week) for the last year of service:

• Two weeks wages (based on a 40-hour week) for other years up to a maximum of 19 years (i.e. a maximum of 42 weeks salary). • The value of any outstanding leave or pro rata leave from severance date.

• The payment of retiring leave to those who qualified in terms of service.

• Three months wages in lieu of notice, based on a 40 hour week, regardless of service. • One month’s wages

in lieu of notice, based on a 40 hour week, for each dependent child and spouse.

• The cash value of any outstanding long service leave. Industrial sources in Wellington said it was illegal for an employer to pay three months pay "in lieu of notice” in a redundancy situation over and above the “four plus two” formula contained in the Wage Adjustment Regulations, 1974. The 1974 Wage Adjustment Regulations allow for maximum redundancy payments of four weeks ordinary time pay for the last year worked and two weeks pay for previous years worked up to 19 years.

The sources said private sector employees made redundant, who had not taken long service leave due to them, forfeited the leave.

Employers told NZPA they regarded the one month’s pay in lieu of notice for each dependent child and spouse as extraordinary.

However, the corporation’s assistant general manager (personnel), Mr Kevin Hyde, said the corporation was not acting

illegally. He said Railways was proposing a different package from those covered by the Wage Adjustment Regulations. He cited the case of an Air New Zealand pilot, Mr Errol Carr (E. P. Carr V the Aircrew Industrial Tribunal and Air New Zealand) and referred to a September 5, 1985 High Court decision.

Mr Hyde said in that case Air New Zealand held that its own severance agreement was legal and not in breach of the Wage Adjustment Regulations.

He said the Court held that before the regulations could apply the workers’ employment had to be terminated by the employer. “In the case of the pilots covered by thevoluntary provisions of the severance agreement their employment was not terminated by the employer — they resigned,” Mr Hyde said. "The regulations did not apply to the pilots.” In his booklet Mr Purdy also said staff who were over 50, with at least 10 years contributory service to the Government Superannuation Fund, could opt for early retirement.

"Put simply, your annuity from the superannuation fund will be calculated as if you were 60 years of age,” Mr Purdy said.

The corporation’s offer for the two schemes was conditional on alternative train manning being introduced on freight trains without industrial disruption.

He defined alternative train manning as removal of the guard’s van from freight trains; abolition of locomotive assistant positions; abolition of guards positions, and the creation of train operator positions to carry out the duties previously performed by locomotive assistants and guards.

“Obviously guards will still be required to assist with the running of passenger trains,” he said. "However it is intended that the name ‘guard’ will be changed to ‘conductor.”Mr Purdy said the previous three-man train manning system belonged to a bygone era when steam engines needed a driver and a fireman. “There is no need for either a brake van or third person on most modem trains,” Mr Purdy said.

Two-man crewing would cut Railways’ wage, maintenance and capital costs.

“Each of the corporation’s 245 brake vans costs on average $14,700 per van per year to maintain,” Mr Purdy said. “New brake vans cost up to $250,000 to buy. Nonreplacement and phasing out of older vans will save large sums of money which can be used to buy new, more cost-effective rolling stock.” Train safety standards' would not be compromised and there would be no compulsory redundancies as a direct result of the two man method.

“Where possible displaced staff will be offered redeployment and retraining. Rates of pay and promotion opportunities will be unaffected. Traditional supervisory positions will be kept available.”

Mr Purdy said the engine drivers’ role would change little apart from having to know what the train operator’s role and duties were.

Commenting on the role of freight train guards prior to departures, Mr Purdy said this would now be done by a train preparer.