Nortel’s Long-Term Disability Plan in Jeopardy

By Mark Evans | Published: July 8, 2009

According to the Financial Post, Nortel may pull the rug out from under employees who are on long-term disability if the company does not emerge from bankruptcy protection.

The problem is these benefits are not insured, which means the money is coming from a Nortel Health and Welfare Trust as opposed to an insurance company.

There are more than 400 Nortel employees on long-term disability. If Nortel proceeds with its asset sale, these people would join the long list of unsecured creditors.


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  • TexasBahr

    Yes, that's the way… go after sick and crippled children next.
    It reminds me of the line from the French revolution when Marie Antoinette said, when asked about the poor starving French citizens not having even bread to eat, she replied “let them eat cake”. The analogy is targeted at the ridiculous salaries, bonuses, golden parachutes the executives still have and of which could probably fund continuing the long term disability payments.

  • yes4aapl

    $45 mill would be enough for another 10 years of payments for long-term disability employees.

  • How_long

    Can't imagine a Canadian company would do that. Hang on. Its Nortel. Anything's possible.
    There will be lots more unsecured creditors if asset sale goes ahead. Pension Funds for a start. Everybody wait in line for the scraps thrown down.

  • CrazyCanuk

    No surprises there really as these payments are currently being made by Nortel..

    If Nortel doesn't emerge from bankruptcy protection and ceases to exist then it's not really an issue issue of “pulling the rug out from under” those folks receiving LTD. More accurately it's a case of the entity that was making the LTD payments ceasing to exist.

  • ntpurgatory

    Wondering if it makes sense if as an employee with the possibility of sticking around a bit longer (maybe I get to help turn out the lights when it's over), if it doesn't make sense for me to go get LTD somewhere else now?

    Wait, what am I saying? Of course it makes sense!

  • protosphere

    They saved on disability premiums to neglect the disabled?

    Well they sure didn't thrift by increasing their lawsuit insurance premiums recently to cover a potential whopping $300M in potential legal fees.

    And to pay many millions in bonuses into the close while using bankruptcy laws to not pay severances under government questioning…

    They just keep on a hurting everything in its path, except management they defend of course …is anything they do not disappointing?

  • 4merEmployee22

    Will NORTEL NETWORKS ever emerge from shame? Forget about
    emerging from Bankruptcy Protection. July 30, 2009 can be extended
    again! and again!

    Really? Will they (head honchos) ever emerge from shame? Let's get back to the CCAA statute. It stands for Company Creditors Arrangement Acts.

    Just who really declared “SECURED” and “UNSECURED” Creditors?
    Was it the owners of NORTEL?
    Did NORTEL suddenly made changes to the ACTS for its own benefits?

    Just curious, eh?

  • NortelTragedy

    Mike Z, the BoD, the SLT and E&Y have brought disgrace (DIS-GRACE) to Nortel and everything it has ever stood to represent.

    Shame upon them all.

  • JlouisMeneghetti

    Well… Except that the queen said so because she has been lied to all her reign long, which cannot be said of the Bod, E&Y, et alles… They perfectly know what they are doing.

  • JlouisMeneghetti

    Agree with NortelTragedy. This is a total disgrace.

  • basft

    You pay premiums for disabilty. You believe that only 6 months ago, they said there was a mix up and that disability payments would never have a problem again, now what? I hope the $450M to keep the 'management' in place to steer the firm all receive another bonus… the clap

  • scalppeeler

    What's the disgrace, being on LTD?

  • felixmk

    You want to have some interesting discussion? If so, find out what % of people on disability from Nortel are female. Then compare this to the % of female employees. Just wanting to stir up some interesting discussion…

  • ChaiTea

    Within Nortel I had seen that there was a rapidly diminishing sense of compassion towards struggling employees even long before chapter 11 was declared.

    When time for optimization came, managers were not hesitant, sometimes, to put forth names of people who they knew were struggling due to recent medical issues, or just had a child in the family, or were dealing with some temporary family issue.

    If I was in charge, then I would have gladly reduced our outsourced contractor budgets (i.e. flexforce in India) to compensate for these rare cases. Unfortunately, compassion and community values disappeared long back. Whats worse was that rest of the folks just watched this as mute spectators.

    Dont just blame the executive management for the decline in ethics & morals. Rest of the folks who kept quiet like sheep and didnt speak up for their colleagues in their time of need, also bear a share of the guilt.

  • XPM_guy

    I would say that the disgrace is the ELT & BoD deciding that insuring LTD benefits was not cost effective, unlike all the insurance they purchased – with company funds – to protect themselves from any lawsuits filed by the folks they are screwing (e.g. LTD recipients, pensioners, ex-employees waiting for their severance, etc.)

  • NortelTragedy

    Did Hackney get out of his cage and go on a rampage again, putting women on LTD? Wouldn't surprise me.

    Notice how there are no females on the ELT?

    http://www.nortel.com/corporate/exec/

  • sick_sigma

    There are no females on the ELT but joel choker hackney did promote one of his girls to a very high level position after the bankruptcy occurred — Jenna Stanley.

    Just what we needed. Bodies are falling everywhere, people losing pensions, benefits, employment, etc. and we add another layer of management at the top.

    Not sure what Stanley's qualifications were to get this position. She does not seem the least bit impressive to me. Perhaps she is an old college buddy of hackney.

  • JlouisMeneghetti

    Obviously not. Sorry for being ambiguous. XPM_guy put it more clearly below. The disgrace is with E&Y, the BoD and the top brass of Nortel.

  • longgone

    ahhh, the ELT…..one of those “E's” was dubbed “the snake” early on in his days at NT, even when he was rank and file…….some things (and people) never change

  • yes4aapl

    The problem is these benefits are not insured, which means the money is coming from a Nortel Health and Welfare Trust as opposed to an insurance company.
    ====
    something to investigate I guess
    1. How much money Nortel paid _transferred to Sun Life Assurance Co each month?
    2. How much was the expense side for Sun Life Assurance Co?
    3. How much was the profit_earnings for Sun Life Assurance Co?
    4. What would be the difference in Noertel's costs if the LTD was insured by Sun Life Assurance Co?
    5. What would other insurer charge to have Nortel's LTD employees insured?
    here you go
    No matter the reason or the outcome, Nortel's managers failed again and should take responsibility for that. in other words, charges should be laid. IMHO

  • horace_grimswold

    Been in an accident?

    You might be injured and not even know it!

    Work for Nortel?

    You might be working in an accident and not even know it!

    No trial lawyer will be able to fix either of these.

  • Moose_Chaser

    Don't waste your time on Scalppeeler.

    He don't get off the Rez much.

    MC

  • zeroman

    If there is a way to knife people in the back, then this is the classic way to do it. When will Z go on LTD and not get anything.

  • zeroman

    she graduated with honours from Asskiss U aka Duke.

    silly question. what made you think hack is qualified to hire.

  • NortelTragedy

    Many of the current “executive positions” didn't even exist 6 months ago and are recent structural org developments as part of the new BU structure (CDMA, GSM, CVAS, MEN). Many, many positions were created and filled simply to reflect token diversity and/or to find a job for loyal friends and cohorts. For example, some of the CDMA resources slated for NSN have little to no wireless experience, much less in CDMA technology or customers.

  • NortelTragedy

    Qualifications? It's who you know. She was Ken Pecot's protégé. Ken was another “leader” that could never deliver and the charisma of a rock.

    But these newly branded “execs” are probably getting sweet KEIP/KERP money in their token “GM” roles. I hope Avaya, NSN, or whoever buys the assets will see through the veil of deceit for what these stuffed suits really are – accountable for the downfall and undeserving of even a Jr. Engineer position at the acquiring company.

  • jazzybest

    So tomorrow if you get hurt on the job for any reason and get LTD you potentially will be cut off down the road if the company goes bankrupt? Am I wrong there? Why would the company not have benefits insured ? What if the job caused your disability?

  • norty

    Where is the money we have deducted for LTD going – why wasn't this disclosed when benefits enrollment was last offered and why is the money still being deducted?

  • janicecofell

    Interesting that Nortel Networks would steal money from the disabled, but not surprising since they have stolen severance monies, RAP and will steal pensions from retirees to line the pockets of their greedy, self-serving execs… People who were paid $45 million in bonuses to stay, and then walked with OUR money. Mike Z. told Howard Green he would not be leaving with a package from Nortel, but now is asking for $12.3 million US in back wages…ahem, maybe that is his children's college fund… He, and his ilk, are just the oil slick that company went down on. I don't feel very happy thinking my $80,000 in RAP is filling their trough! Shameful cowards, thieves, stealing from the sick…

  • nettehead

    What is the story relative to U.S. Nortel Networks employees who are currently on Long Term Disability. I've seen a reference to some statute that exists in the U.S., but nothing about how the details work.

  • scalppeeler

    I can't comment on specifics because I simply don't know but if I was a betting man, yes if I was a betting man I would bet the American System has something in place preferrable and more secure than its canuckistan counterpart. The reason I would wager this? Look how the American Gov't came to the rescue of Nortel Pensioners. It did not happen in canuckistan morontario.
    That makes me place my bet on the side of the americans in this case. Once again they are probably doing the “right thing” as spike lee says while the canadians are ready to embark on a 10 year haitian rebuilding plan at the taxpayers expense.
    There better be some kind of incentive in here to create jobs in Canada.
    Proving once again that Canadians take care of their own LAST if at all.
    Unless of course you are a Canadian of Convenience.
    Charity begins at home.

  • nettehead

    What is the story relative to U.S. Nortel Networks employees who are currently on Long Term Disability. I've seen a reference to some statute that exists in the U.S., but nothing about how the details work.

  • scalppeeler

    I can't comment on specifics because I simply don't know but if I was a betting man, yes if I was a betting man I would bet the American System has something in place preferrable and more secure than its canuckistan counterpart. The reason I would wager this? Look how the American Gov't came to the rescue of Nortel Pensioners. It did not happen in canuckistan morontario.
    That makes me place my bet on the side of the americans in this case. Once again they are probably doing the “right thing” as spike lee says while the canadians are ready to embark on a 10 year haitian rebuilding plan at the taxpayers expense.
    There better be some kind of incentive in here to create jobs in Canada.
    Proving once again that Canadians take care of their own LAST if at all.
    Unless of course you are a Canadian of Convenience.
    Charity begins at home.

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