Home NewsLocal News LNDC rocked by severance pay row

LNDC rocked by severance pay row

by Lesotho Times
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Lekhetho Ntsukunyane

LESOTHO National Development Corporation (LNDC) staff are at loggerheads with management over a combined M4 million severance package they should have received after being exempted from making severance pay contributions by the Department of Labour in May this year.

The MNN Centre for Investigative Journalism (MNNCIJ) has learnt that the tiff has escalated to the point that staffers told Trade and Industry Minister Tefo Mapesela they would embark on industrial action or even suing the parastatal if management reneges on its commitment to pay the money.

The LNDC is an arm of the Trade and Industry ministry charged with the implementation of the country’s industrial development policies.

It was granted exemption from severance pay contributions by the Department of Labour in May this year, in line with provisions of the Labour Code of 1992 as amended.

The corporation had requested for the exemption on the grounds that it already had a “good” pension scheme with a local insurance firm, and that there was no need for an additional terminal benefit for the staff.

After the Department of Labour granted the exemption in May, LNDC management, through a resolution by the Board of Directors, undertook to pay all eligible employees their severance payments by the end of June 2017.

In a memorandum dated 13 June 2017 and addressed to all staff, the Caretaker Chief Executive Officer Nthabiseng Posholi stated that payment was expected to be finalised by end of the month.

“You are advised that severance pay provision will be paid to all eligible employees as per the Board resolution. Management will update the Board about the granted exemption and conditions already approved. Thereafter payment will be effected. The process is targeted to be completed before end of June 2017,” Ms Posholi said.

She also pointed out that deductions would be made from the severance pay contributions for employees who owed the LNDC.

Severance pay contributions, Ms Posholi said, could offset debts since pension was not classified as a benefit.

Staff members who spoke to the MNNCIJ on condition of anonymity for fear of reprisals said management had reneged on the commitment. They said some of the managers had ulterior motives for delaying the payment, since they also wanted to benefit.

“There something fishy about this whole arrangement. Some people in management want to benefit from this arrangement at the employees’ expense,” a staff member said.

“Our suspicion is that some managers are frustrating the payment process because they anticipate promotions soon after the contracts of others lapse by end of this month (November).

“They are intentionally frustrating the severance payments until their promotions so that, at the time severance is paid, they would be holding new positions. They will then receive more money because it will be calculated in terms of a staffer’s salary at the time of payment.”

Another staff member said they had already made financial commitments based on the expected windfall.

“The sad thing is that some of us have already made financial commitments with the hope of receiving the monies in June as per management’s promise. We are deep in debt now because the money has not come.”

The staffers have since engaged the ministry’s Principal Secretary (PS) Thebe Makoatle, who is also chairperson of the LNDC Board, as well as Mr Mapesela.

In their letter dated 10 October 2017, and addressed to Mr Makoatle, the workers note that management had changed the date of payment, with the LNDC Board yet to decide on another date.

The workers also gave the PS a seven-day ultimatum to facilitate the payments.

“We would like to bring it to the Board’s attention that certain features of that process need to be elaborated and explained to the Board. When the management first announced the decision to apply for exemption, an express undertaking was made that all accrued severance pay would be paid to deserving employees up to the date of the payment, irrespective of when the Labour Commissioner granted the exemption,” reads part of the letter.

“Again, during the consultation phase of the process by the Labour Commissioner, the undertaking to pay was reiterated and this remained the understanding between the employer and employees.”

They continue: “We were again notified in a staff meeting held on 29 June, 2017 that, following dissolution of the Board, payment was now pending the appointment of the new Board of Directors, which was to be informed of the development and the existing decision and undertaking, and this would be followed by immediate payment.”

The decision to change the payment date had caused inconvenience.

“For example, some members of staff have made commitments knowing that severance pay was going to be paid in June 2017. This can be seen from the increased number of salary advance applications in July, 2017.

“Secondly, deciding not to pay severance pay only now, five months after the exemption was granted, has denied staff members, especially those who are approaching retirement age, to decide on whether it would be best for them to take early retirement and get their full separation benefits or whether they would stay and risk losing their accumulated severance pay.

“This is the background against which we, as employees permitted the alteration of our existing contractual terms to remove severance pay as one of the parting benefits. Employees agreed in good faith and belief that the Corporation would likewise honour its undertaking, having been so created by the Corporation. We accordingly consider this to be binding on the Corporation and employees.”

The MNNCIJ also saw a missive in which Ms Posholi deferred the matter until the appointment of a substantive CEO. It is unclear when the Board will appoint the new CEO, but the MNNCIJ learned the closing date for applications was on 27 October 2017.

The MNNCIJ sought an interview with Ms Posholi from Friday last week, but it had not materialised until the time of going to press.

For his part, Mr Mapesela confirmed that he had met with the workers, saying they could not embark on a go-slow over that issue.

“It is unfair that they threaten to embark on a go-slow. They are not necessarily entitled to the severance pay because they are not leaving the corporation as yet. The law is clear that severance pay is provided to a person leaving the job.”

However, Mr Mapesela said he was willing to recommend to the LNDC Board to consider disbursing the money to the staff.

“I will just make a recommendation to the Board because it not my area and mandate to make a decision on this matter and pass an instruction to either the Board or the management. A resolution to pay the workers was made by the previous Board. The new Board has not made any decisions on this matter. One would ask, why did the previous Board made a resolution to pay the staff and not effect the payment there and then?” the minister queried.

The Board that made the resolution to pay staff was disbanded by former Trade and Industry minister Joshua Setipa earlier this year. Mr Setipa appointed a new Board a week before the 3 June 2017 parliamentary elections. But it was dismissed by Mr Mapesela in August this year, and he appointed a new board recently.

Efforts to secure comment from the former Board members proved fruitless until the time of going to print.

For his part, Mr Makoatle referred this reporter to LNDC management.

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