LIAT Provident Fund At Issue

Pilots, Airline Square off


A 2004 court victory for the Leeward Islands Airline Pilots Association (LIALPA) that determined that LIAT did not have a right to terminate their Provident Fund will be crucial to the ongoing talks between the two sides which started yesterday in St. John’s Antigua.

In fact this is one of the sticky points in the negotiations that could escalate the tense atmosphere between the two sides which has already caused some uncertainty about the airline’s travel schedule in the next few days leading to Easter, a busy period for regional air travel.

High Court Judge Errol L. Thomas reviewed the case between September 22 and November 11 of 2014 and concluded that the defendant (LIAT -1974- Limited) did not have a right to terminate the Provident Fund in view of the arbitration award certain legal instruments and collective agreement. In any event the exercise of the discretion by the Company was unreasonable having regard to all the circumstances.”

Judge Thomas, in outlining the circumstances of the matter between the two parties, noted that the pilots were employees of LIAT and as a consequence of an arbitration award and subsequent collective agreements, a Provident Fund was established with retrospective effect from 1st January, 1975 and that the issue centred on the exercise of certain powers relevant to the Fund.

He identified and analyzed the Arbitration Award of 1977, Rules of the LIAT (1974) Limited Staff Provident Fund of 1989, the Trust Deed dated 27th June, 1990 and the Memorandum of Agreement between LIAT and LIALPA.

In his analysis of the outstanding features of the various instruments, including the Arbitration Award, he noted that they arose at different times between 1977 and 1996 and that the matter of the Provident Fund was dealt with in some form. However, he noted that for the purposes of the case the central matter was the construction of the various instruments in terms of the termination or otherwise of the Fund.

Against the backdrop of the award of the Arbitrator the judge felt it was necessary to consider certain provisions of the Memorandum of Agreement between LIAT and LIALPA. He also looked at the other side of the equation which has to do with the rules of the Fund and the Trust Deed, adding that while the rules of the Fund provided for the circumstances in which LIAT may suspend or discontinue contributions, the Trust Deed said that the contributions by LIAT shall be regarded as voluntary only. It also vested in LIAT a power, at any time, to reduce, suspend or terminate its payments.

The question, however, for the judge was whether the powers of LIAT stand in the face of provisions of the Agreement and the award and whether LIAT had the right to terminate the Fund unilaterally.

LIALPA submissions were that LIAT is bound by the Arbitration Award and that its contribution which is fixed as a result of the Award and the collective bargaining process is in the nature of an employment entitlement which may not be varied by LIAT’s unilateral act. Further, that the entitlement of each pilot, from the coming into existence of the Award, to a monthly pension contribution by LIAT equivalent to five percent of each pilot’s basic wage cannot cease by LIAT’s unilateral act.
LIAT contended that the rules of the Fund and the Trust Deed had the overriding effect to the establishment, maintenance and termination of the Fund, that the collective agreements of 1990 and 1996 which required LIAT to make payments into the Fund could not supercede the 1989 rules and the Trust Deed. Further, that the Fund had no existence in and of itself independent of the rules and the Deed, that LIAT was entitled to terminate the Fund as it did in May 1998 and that once the Fund was terminated there was and could be no basis under the Collective Agreement to compel LIAT to make payments.

1 Comment

  1. I started at LIAT in 1980, was medically retired in 1996. From those years at LIAT and being familiar with the contract of employment I know that the Provident Fund was/is composed of mostly employee money and a smaller portion of Company matching funds – just like any other company scheme.

    But for almost the entire period of my employment LIAT management were trying to get at that block of employee funds to use as “working capital’ – and they would have lost it ALL if they had succeeded, just like they lose everything else.

    A few years before I left they were denied by the courts – yet again- another application for access to the employee funds, and some smart manager decided that, if they were not allowed to take it out, then they would simply not put it in.

    After I left I was told that when LIAT management finally got the Fund closed down LIAT, owed it over US$10 million in both employee and company contractual obligations, and when the employees got paid out trhey did not get any of that money. I don’t know about you, but in my books that is outright fraud.

    From top to bottom, LIAT shareholders and Board do not have – and never have had – a clue, and there are still some in management who should really be sitting in a jail cell somewhere for the abuses of both employees and their rightful property – saved for their retirement and old age. What happens between management and the employees at at LIAT is disgusting, unfair and unlawful, and has been for MANY DECADES.

    But the rich and powerful shareholders and Board are getting theirs, so why should they care about the poor people who have to save their pennies?

    For the sake of a better future for the aviation workers of the Caribbean, I say SHUT IT DOWN so they can get away from the abuse and get on with their lives. Their renewed journey through life should start NOW, not when the shareholders and airline is so starved of cash that they cannot pay the employees for three to six months and the employees cannot pay their bills.

    LIAT will never change, I say SHUT IT DOWN. SHUT IT DOWN. SHUT IT DOWN.

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