Close To $10 Million In Severance Claims Paid Out to Date, Says Minister Phipps

BASSETERRE, St. Kitts, December 18, 2020 (Press Unit in the Office of the Prime Minister) – Minister of Labour, Senator the Honourable Wendy Phipps, revealed in the National Assembly on Thursday, December 17 that to date, the Department of Labour has paid out close to $10 million dollars in severance payments to more than 900 claimants.

Minister Phipps made the revelation while lending her support to The Appropriation (2021) Bill, 2020.

In a detailed account of the work of the Department of Labour, the honourable minister stated that at the end of day on Monday, December 14, the department had received a total of two thousand, three hundred and fifty-three (2,353) claims for severance payment.

“Data from the Labour Commissioner indicates that as of Monday at the close of business the total number of claims received was 2,353; the total number of claims being processed right now – 1,277; the total number of claims received between the 10th and 14th of December alone – 59; total number of severance claims processed to date – 1,017; total number of claims paid out to date – 916; the total number of claims awaiting payment – 101, and total amount of money paid out by the Department of Labour thus far for severance claims – $9,974,817.76,” Minister Phipps said.

To facilitate the payment of these claims, the Team Unity administration provided additional resources in the region of $11 million to capitalize the Severance Payment Fund as part of its $120-million stimulus package.

Minister Phipps said, “Traditionally, the Severance Payment Fund has always been in a state of arrears largely due to abuses to the system. Abuses committed by employers, abuses where it might have occurred in the past where even staff members within the department would have colluded with employers to put through severance claims that were not genuine claims.”

The Labour Minister further stressed the need for a review of the Protection of Employment Act to address several issues, including the Severance Payment Fund, which was severely haemorrhaged by the former administration.

Senator Phipps said, “When it comes to severance payments, the only person who contributes to the Severance Payment Fund is the employer; the worker does not pay a cent. One per cent of payroll is deducted from the employers’ full payroll number to go towards severance pay, and it means then…that several things are going on here; the fund is undercapitalized, it is in need of review and it has also demonstrated the need to fill loopholes and gaps where abuses have been taking place. But then the fund was further taxed when, in 2014, the previous government introduced the long service gratuity but then failed to put additional monies into the fund to capitalize it, so the same pot of funds where severance payment claims were being paid from is the same pot of funds that we are expected to pay long service gratuity funds.”

To further rectify the matter of severance payments going forward, Prime Minister and Minister of Finance, Dr. the Honourable Timothy Harris, announced the injection of additional resources in the region of $7 million to further capitalize the Severance Payment Fund and facilitate the payment of severance claims in 2021.

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