No Severance for You!

By Mark Evans | Published: January 15, 2009

There’s obviously a lot of bad things involved with Nortel’s decision to file for bankruptcy protection but among the most stinging – at least in the short-term – is the that many people who recently left Nortel with severance packages won’t be receiving them. This likely includes many of the senior executives – ex-CTO John Roese and ex-CMO Lauren Flaherty – who were let go last September.

What’s particularly frustrating to many of these employees is Nortel apparently had a 60-day waiting period before they got their severance payment as opposed to giving people their money right away as a goodbye gift/gesture. This meant that many employees who had agreed to severance packages and were waiting for the cash to hit their bank accounts, now get nothing.

Given Nortel still has $2.5-billion in the bank, it must be particularly disappointing for these people not to receive some financial support given they have lost their jobs amid a recession.

For more on Nortel’s severance woes, check out this Globe & Mail story.

Technorati Tags: ,

[Slashdot] [Digg] [Reddit] [del.icio.us] [Facebook] [Technorati] [Google] [StumbleUpon]
This entry was posted in Financials. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.
← Older Comments
  • NortelMania

    On a side note, Ernst and Young have recommended to keep AIP (annual incentive plan) and a new Key Employee Incentive Plan (KEIP) which would be used to fill executive's pockets and the deserving employee gets peanuts. Another of day light robbery from the “Top Management”

  • http://nortelinsider.wordpress.com/ Desk Jockey

    Your views reflect many within Nortel's rank, though obviously not those at the “top”.

    Those who didn't believe Mike Z.'s ramblings were ostracized as not being “team players” or those who didn't “believe”. How strange that truth and honesty are now derided with these ridiculous derogatory musings.

    Those who did believe have had their faith tested and ultimately destroyed by this reckless and irresponsible GE “management”. (I put “management” in quotes because they obviously cannot manage anything)

    To those who continue to believe the lies: the above comment is the dose of truth that you need. Is it not insane that bankruptcy is now equated with a “sound and stable financial footing”?

  • http://nortelinsider.wordpress.com/ Desk Jockey

    “The more corrupt the state, the more laws” – Tacitus

    No where more does this apply than to the current Nortel executive. All this talk about ethics and integrity, when what they have demonstrated has been the exact polar opposite of this.

    First, there was the stacking of the management team with cronies and yes-men. Then there was looking the other way after Hack-Attack demonstrated his true colors. Then finally, there were the outright lies and attempts to deceive employees and shareholders.

    Do they even believe themselves anymore?

  • http://nortelinsider.wordpress.com/ Desk Jockey

    There is a new word for employees now. It's called “slaves”, and though the term is not used, it better reflects now the current Nortel executive has treated their workers.

    Techorama, I could not have said it any better. Mike Z. and his team of GEniuses has betrayed us, betrayed shareholders and betrayed the public at large. I have a tough time figuring out whether they have done this as pure malice, or whether they are truly this inept to believe they were, and continue to be, “on the right track.”

  • joremero

    why so much? how many months or salary?

  • Meridian

    Anyone know how the Ontario Labour Laws regarding severance plays out against the Canadian Bankruptcy protection rules ?

    http://www.labour.gov.on.ca/english/es/guide/in…

    Chapter 15 /16 discusses severance but does not indicate impact of Bankruptcy protection. Mike Z has said no severance going forward… but the Ontario law seems to state differently. Does severance fall in line as one of the creditors ? Anyone check with lawyers or Govt ?

    P.S. happy weekend

  • Casual_Observer

    So basically you are working for free after closing time today. I see you are continuing to drink the kool-aid they are feeding you. The lines between capitalism, socialism and slavery are very blurry these days. If I were still an employee, I would wonder if Mike Z and other execs got their paycheck today. But I guess that information really isn't publicly available.

  • wasthere

    Was on a pre-pension bridge for the next year and a half as per my union contract. The payment is stopped + another big cut on a lump sum due when official pension would begin.

  • TongueInCheek

    OK Desk Jockey, I can admit when I am wrong, not a problem there at all.

    However, did Nortel not say that the full cash amount to cover payroll was sent to the US Banks and it was the US Bank's decision to hold the cash and not transfer it to your personal account? Sounds like these US Banks get to make a couple of days worth of interest at your expense doesn't it.

    Please explain, how is this Nortel's fault when they paid in full under court approval every single employee's pay. I'm in Canada, and I now that my friends at Nortel all got paid in full today.

    So, was I surprised that Nortel filed for bankruptcy protection – absolutely.

    Was I wrong in my previous statements on this – absolutely.

    As a Canadian citizen, do I want to see a Canadian Technology firm destroyed – not a chance.

  • Pingback: The day after « Nortel Insider - by Desk Jockey

  • Nortel_Sucker

    It is partly true that they will keep the AIP but the way I read it was that it was for 2009, not 2008 so there will be nothing this year. I also believe they said it would change so they are not keeping it. Whatever. This Plan was a joke. Managers were to rate employees by their Contributions. Low, Medium and High. However there was only so much money to hand out so even though a group may have had many HC's, they would get shafted and moved to MC or LC. If a group had all LC's, a few of them would get HC status. JCI level was another factor. Managers were not eligible as they have their own (secret) bonus's. Maybe someone can elaborate on those.
    Anyway with regards to the employee Incentive, even being a JCI 3 HC got you maybe 7 grand. Make that 4 grand after tax. That seems like a lot now that you don't have a job but compared to other Company's, chump change. This was even true in the boom yearrs of the 90's. No worker bee got much with these programs and in my opinion, forget what they said. Your not getting a incentive bonus.
    As for the Key Employee Incentive Plan they were very clear that very few people will qualify and not to go away from the meeting thinking there is a retention plan. This was stated by some head clown from HR after a Richard Lowe BS session. I must qualify that the winner of the ass kisser award in Nortel should go to Lowe. This puppet was strictly their to rely messages from Mr. Ethical, Mike Z and the rest of the GE hacks.

  • Casual_Observer

    At what cost do you not want to see it fail ? Would you be in favor of higher taxes to bailout Canadian (not even fully Canadian) firms like Nortel ? The free market should let companies like Nortel fail. The same goes for all the banks who cannot survive on their own. Unfortunately we have too much intervention and very little capitalism and now reward failure with bailouts. EDC is nothing more than a glorified bailout. The truth of the matter is if a company cannot compete effectively and make money on its own, it should not survive. No one wants to see failure but it is a healthy part of capitalism that is not currently allowed to be played out. Instead we will get more intervention and more failure because those that are failing are rewarded.

  • http://nortelinsider.wordpress.com/ Desk Jockey

    Do not try to bind my criticism of falsehoods to some imagined belief that I want Nortel to be “destroyed”. Doing so is simply continuing the pattern of deceit that you have consistently engaged in.

    Do I want Nortel to survive? Of course I do! As I have mentioned multiple times before, I am proud of Nortel and what it represents. But, like many, I have lost faith in the executive management and the BoD for their continued inaction, denial and disinformation in the face of this crisis and before.

    They continue to spout the same “party lines”, and for some reason, many feel the need to repeat this as though it was the infallible truth. Spreading of these lies is what has contributed to Nortel's decline, and I, more than anyone, want to put an end to that.

    As for your question as to how it is Nortel's fault that the banks wanted to make “a couple of days worth of interest”, you are completely misguided. Please try to put 2 and 2 together. Nortel has never been late for payroll. Is it just a mere coincidence that the banks would try to make some extra interest right now? Or is it more likely that they were not sure Nortel was good for the money, and wanted to take a cautious approach?

    The point that the original commenter (Casual_Observer) was trying to make is that Nortel does not appear to be operating normally, despite claims to the contrary. I question your motives for attacking him for what you perceive to be “the spreading of lies”, when it is you who has been proven guilty of such a misdeed, time and again.

  • MianFei

    In his first GIS in Ottawa Mr. Mike Z. compared Nortel employees to auto factory workers, this is perfect correct, now they are facing the same situationat the same time with his great 6 SIGMA (Why not 5 alpha???) work, now I understand why he made that comment. His first work item is remove the cloude over UMTS, he sold it , now UMTS start earning money, Mr Mike Z. removed the UMTS department and left the cloud in Nortel, thank you Mr. Mike Z.

  • wasthere

    I like capitalism laws. You can fire people then get on chapiter 11 and cut their severance pay. Win win situation as we often hear in corporations !

  • wasthere

    Looks like this big scam was in preparation months ago.

    http://www.canada.com/ottawacitizen/news/story….

  • Paycheck

    The executives knew that they would declare Chapter 11 in Jan'09, they already had bankruptcy lawyers working with them well before the end of 2008. They tried to deny it when the WSJ published the story about Nortel.

    They also knew that those employees being made redundant before the end of 2008 would be screwed out of their severance.

    But, I really do feel very sorry for those employees who have missed out on their payment after many years of very loyal service (many of them very good friends of mine). I hope everything works out ok for them all.

  • xNortel

    It is a tragic day. So many good, talented, hard working people have been misused and mislead.
    My advise for what it is worth – if you are talented, hard working and want to work in a positive environment, dust off that resume and start looking. If you are employed still at Nortel you have some time – but not much. The “golden handcuffs” of pension, bonuses and a severance package are gone.
    Do the best thing for you, your sanity and your family start looking. Make your job search your #1 priority and Nortel 2nd or even 3rd. Do what you have to do at Norel to keep money coming in until you find a new and better position. Nortel will barely notice with the morale so low.
    You will never believe how good a new job can feel. There are jobs out here where you can telework, get good pay, good bonuses and not be flogged daily by the despair. There are well run companies out here who are making money. Believe me when I say it is a great feeling to work at a company that makes money, values its employees and respects your work. There is life after Nortel you just have to take back control and look for it.
    I mean all of this with the best possible intentions….I just hate to see all of the pain folks are experiencing.
    Go for it!

  • wasthere

    Incredible what they did ? Fire a ton of people just before they file for chapter 11 so they can cut their severance. In my case, I am also cut from the healthcare program that I could continue because I was on a pre-pension leave. Seems that they will cut to 0 a pension lump sum I was entitled a year from now. Oh yeah, the programm offering with a private agency to help people find a new job is also cut. Unbelievable !!!!!

  • NortelExs

    I was laid off Tuesday afternoon, conveniently scheduled less than 24 hours prior the the big Chap. 11 announcement. I didn't receive ANY of my 60 days pay, nor did I ever get to see any of my severance package….i got NADA. I also called to verify I would still receive my earned vacation time, on Wednesday I was told to expect to see it in 1 to 2 pay periods, Friday they told me it's “now in discussion” How is this possible??

    Does anyone have any idea if I will ever see ANY of what I am owed? I understand that the severance pay I may not be entitled to, but what about the 60 days of pay that was guaranteed under the WARN Act? I'm being told to file a claim with the bankruptcy court… I've never had to do something like this, as I'm sure most haven't either. Do we expect to actually receive anything? Ever? What's this process consist of? And what about a class action lawsuit?

    I'd love to seek legal advice, but yeah, suddenly money's a big tight right now :( Good luck to everyone out there…it's a tough time for all right now.

  • joremero

    unfortunately for you, CH11 allows for many “obligations” to be ignored, so you might want to consult a lawyer to see what you are entitled to. I know money may not be available, but see if they will work and get paid once they get you some money… (called pro bono ? )
    otherwise, read as much as you can about CH 11 or whatever it is called in Canada and see if you can read experiences from employees from other big companies who have filled for BK protection before.

  • Just_Thinking

    This comment is intended for those employees that were laid off after press reports indicated that Nortel was pursuing bankruptcy.

    The act of filing bankruptcy trumps nearly all laws that protect employees rights for pay, severance and a notification period. Bankruptcy laws are intended to give relief from debt that was acquired in good faith that the company is no longer capable of paying.

    People laid off and promised severance while Nortel actively pursued filing bankruptcy were hardly dealt with in good faith. At best, they were misled. At worst, it was outright fraud. Bankruptcy protection is not intended to shelter the company or it's execs from willful wrongdoing.

    This may open the door to the possibility of gaining better status with the bankruptcy court. Employees filing claims may best be served to consult an attorney beforehand. If documents supporting the assertion that you were intentionally misled can be submitted with your claim, it might give you a better shot at getting some/all of what was promised to you.

    It would be very helpful if anyone can find out whether the restructuring bucket was ever funded. If it was not, then there was never intent to pay what was promised. Also helpful would be producing a dated internal email showing that bankruptcy was planned before your severance date. That kind of stuff will probably get the judge's attention.

  • NortelEx_No1492

    Hey NortelExs,

    I was laid off recently so no WARN act/60 days payment for me either. Do you happen to know if we can claim this money when we file with EPIQ? No one was able to answer this question from Nortel HR.

    If anyone knows please let me know!
    Thanks a lot!

  • NortelEx_No1492

    Hey NortelExs,

    I was laid off recently so no WARN act/60 days payment for me either. Do you happen to know if we can claim this money when we file with EPIQ? No one was able to answer this question from Nortel HR.

    If anyone knows please let me know!
    Thanks a lot!

← Older Comments
  • TwitterCounter for @markevans
  • Seeking Alpha Certified