Original URL: http://www.theregister.co.uk/2005/06/02/ibm_severance_grips/

IBM UK workers in the dark as firing crunch time hits

Lacking token bling

By Ashlee Vance

Posted in CIO, 2nd June 2005 13:32 GMT

Exclusive More complaints have surfaced against IBM's severance and firing plans here in the UK with critics saying Big Blue is behaving like an antiquated employer.

IBM last month warned that it would fire up to 13,000 workers - many of them in Europe and the UK specifically. It began the job cut process by offering workers in the UK a severance package that includes two weeks worth of pay for each year of service.

But Amicus, one the largest unions in the UK, with 1.2 million members, has challenged the process IBM put in place to counsel workers on severance options. In particular, the union has charged that IBM is taking an unprecedented step in requiring elected employee representatives to sign non-disclosure agreements (NDAs), which restrict the information they can report back to the rest of the workforce.

"We have never come across that (NDAs) before in this type of negotiation," Peter Skyte, national officer with Amicus, told The Register. "These people can't represent the workforce because they can't report back to them properly with the gagging conditions IBM has in place."

IBM declined to comment for this story.

According to documents obtained by The Register, tomorrow will be the last day IBM employees can seek advice from counsellors on the company's voluntary severance package plans. The workers can then inform IBM of their decision on June 6 and will head out the door on June 16 if they accept the offer.

The documents reveal the following format for compensation:

For employees on standard IBM terms and conditions the payment IBM is offering will be based on 2 weeks’ salary per completed year of service as at the leave date, subject to the minimum detailed below. Two weeks’ salary is defined as annual gross reference salary X 2/52.

An amount equivalent to 2 months’ of gross reference salary will be added to that.

An amount equivalent to the gross amount of the payment in lieu of notice and benefits will be deducted from this figure and the balance will be the ex gratia payment.

One example of IBM worker's compensation was laid out as follows:

Employee has Salary of £5620 per month, is aged 47 on the leave date and has 17 completed years of service:
  • Payment in Lieu of Notice £15563 (Notice Period is 12 weeks)
  • Pay in Lieu of Benefits £831 (Notice Period is 12 weeks. Employee has company car - benefit is £300 per month)
  • Ex gratia Payment £38941
  • Total Payment £55335 (2 weeks of salary per completed year of service, plus 2 months of salary)
  • Pension Enhancement £28100

One IBM staffer who requested anonymity described the voluntary severance offer as "extremely disappointing." Amicus agreed.

"For a world-class company, IBM is not paying world-class redundancy in comparison with some of its competitors who pay, for example, one month's salary," Skyte said.

As a point of reference, IBM's US staffers were not offered any voluntary packaged in this most recent round of layoffs, although relatively few US staff were hit compared to European employees. In the US, companies often offer just two weeks to two months of severance pay total not for each year of service.

The union leader also emphasized Amicus's displeasure with IBM's overall firing plans. The company last year boasted of its intention to hire thousands and thousands of staffers only to end up firing almost as many staff after missing earnings expectations in its first quarter.

"This is a knee jerk reaction to the first quarter that is aimed at boosting share prices," Skyte said. "It's similar to 19th century farmers who hired workers for the harvest and then fired them at the end of the season. That's no way to treat a hi-tech workforce." ®

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