Eastern Caribbean Central Bank Governor Sir K Dwight Venner has questioned where the money will come from to pay workers’ severance if a bank goes into liquidation in Antigua and Barbuda.
The statement is directly targeted at workers who forced temporary closure of some banks and slow operations at others in April when they learned that, under the new law, their severance wouldn’t be protected in a banking collapse.
“The question is, if something is liquidated, where are you going to get the funds to pay the severance. I mean, that’s a practical question,” the governor queried.
Before the new Banking Act, severance for all workers, including bank employees, was governed by the Companies Act, which due to an amendment in 2004, gives worker severance “priority to all other debts” if a business were to fail. That means claims from creditors, people who provided goods and services to a business on an expectation of future payment and even the government in terms of past due taxes, cannot be settled before severance obligations.
When taken to parliament in Antigua, the Banking Act, as passed throughout the Eastern Caribbean, threatened to reverse the order, and that’s the crux of the argument behind the protests in April. The workers and their union wanted severance to remain the priority.
Sir Dwight, however, has now said that he cannot see how that could be the case in a bank collapse.
“We got a letter from one of the trade unions about workers rights. Of course, the workers have rights. We fought (since the) 1930s to arrive at that, but you have to be mindful that there are all sorts of interests and when institutions go down, there are fallout effects,” he said.
The governor has also previously said that, because banks hold much of the assets they have in trust, any money available during a collapse must first got to depositors, then all other claims can be satisfied. That means that unlike with the Companies Act, severance gets no special place over other debts.
The Central Bank Governor’s assertion indicates that even though, Antigua’s Gaston Browne administration conceded and included a clause providing protection for severance, there, in essence, can be no guarantee that severance payments would be safe if a bank fails.
“When severance pay has been applied in Antigua for, as I understand it, say banks let off people, but they are going concerns, so they decided (that) we have the money to do that. But, the practical thing is, if the money is not there to do it, how is it going to be done?” he asked.