Published On: Tue, Mar 29th, 2022

TelEm has to reinstate group savings plan

PHILIPSBURG — Telecom provider TelEm was wrong when it terminated its group savings plan per February 1, 2021, for employees who were employed at the company before May 25, 2010. The Court in First Instance ruled that the company has to reinstate the plan, retroactively to February 2021. Non-compliance will cost TelEm a penalty of $500 per day, with a maximum of $100,000. Because it will take some time to reactivate the plan, the penalties do not kick in immediately, but per June 23, 2022.

On February 17, 2016, TelEm and the St. Maarten Telecommunication Union (SMCU) reached an agreement about the savings plan conditions. The plan is applicable to employees who were employed prior to May 25, 2010, until their retirement age or until they leave the company.

Employees are free to decide how much of their salaries they want to put in the savings plan; TelEm committed to doubling those savings up to a maximum percentage to be reviewed once every five years. These reviews consider the financial situation of the company.

On May 20, 2020, the government agreed with cost cutting measures as a condition for receiving liquidity support from the Netherlands. On June 1, TelEm wrote to the union that a 12.5 percent cut would go into effect per July 1, 2020, until further notice and that there would be no more indexation.

TelEm proposes in this letter to terminate the cost of living adjustment (cola) and any salary increases, to terminate the group savings plan per January 1, 2021 and to implement 12.5 percent salary cuts across the board. “If we cannot achieve a result that works for all stakeholders, the company will have to proceed with reorganization and collective layoffs,” inspiring the SMCU to label the letter as an “indecent proposal.”

Nevertheless, on June 4 parties reached an agreement about cost cutting measures that added up to 10.93 percent. The savings plan was not mentioned in this agreement. Yet, the next day TelEm reported in a letter to the Minister of General Affairs that “the group savings plan will expire per January 1, 2021, and it will not be renewed.”

The union objected, saying that TelEm is bound by the plan “until all employees that were employed prior to May 25, 2010, are no longer employed by TelEm.”

TelEm ignored the union’s call to continue with the savings plan and reported on January 14, 2021, to the relevant employees that the plan had ended and that savings would be made available to them.

In court, the union’s attorney Monique Hofman-Ruigrok pointed out that parties are supposed to consult with each other about the conditions for the plan six months prior to every 5-year period; that termination is not mentioned in the plan; that the savings plan is not a part of the June 4 agreement; and that the savings plan compensates employees for the negative effect of the change from a pension based on final salaries to one based on average salaries. The attorney furthermore noted that the savings plan does not contain an option for termination and that TelEm’s measure amounts to an “unacceptable and unilateral adjustment of labor conditions.”

The court agreed with all of these arguments. “Termination of the plan is not possible, the only option is an adjustment of TelEm’s contribution to it.”

The court ruling states that there have been no talks about adjustments and that TelEm is therefore obliged to live up to the plan’s current conditions.

TelEm’s attorney Charles Rutte contested that there was no agreement about terminating the savings plan. The company is of the opinion that the union understood and accepted it. “Being of the opinion that the union understood and accepted it is not the same as having an agreement,” the court ruled.

The court decision also contains a reference to the Mammoet/Stoof-arrest of the Supreme Court. This arrest holds that an employee cannot turn down a reasonable proposal from an employer based on “reasonableness and righteousness.” However, TelEm did not make a proposal at all and “unilaterally decided to stop the saving plan while this was contractually not possible.”

The court ruled that TelEm was not allowed to stop the saving plan without approval from the union. It ordered TelEm to reinstate the plan per Februari 2021. The company also has to pay legal costs incurred by SMCU of around 3,200 guilders ($1,788).

The court ruling, dated March 22, goes into effect immediately.


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