SEVERANCE PAYMENT FUND IN ARREARS OF OVER $10 MILLION AS RESULT OF THE FORMER ADMINISTRATION’S HEMORRHAGING


BASSETERRE, St. Kitts, March 16, 2017 (Press Unit in the Office of the Prime Minister)
– The Government of St. Kitts and Nevis is continuing its work to rectify the situation it inherited from the former administration, relating to the long service gratuity and severance payments.

Prime Minister and Minister of Finance, Dr. the Honourable Timothy Harris, told listeners of WINN FM’s Voices programme on Tuesday (March 14) that the Severance Payment Fund is currently “over its ability to pay by $10 million” as a result of hemorrhaging by the former administration.

In July 2013, the Denzil Douglas-led Administration passed in the National Assembly, the Protection of Employment (Amendment) Bill, 2013 and while Dr. Harris said the policy in itself might have been good in theory, it was the implementation, he believes, that worsened the situation.

“In the dying moment of the last administration, it went to Parliament, amended the Severance Act – the Employment Act – basically to allow it to provide long service gratuities to persons who were involved in manufacturing and largely in the tourism sector,” the prime minister said. “It was a good idea to help people, but again it was bad in its implementation, like the VAT. So a good policy could become bad as a result of its implementation.”

The nation’s leader went on to explain that despite its amendment to the bill, the government then “did not carve out a particular mode for funding for the long service gratuity payments.”

“So you had a situation which was known to them then that the severance fund was already being hemorrhaged. The severance fund was in the red, was basically operating in a bankruptcy mode because the inflows were inadequate to meet the outflows that were demanded by law by the particular beneficiaries, and so the last government added to the trouble with respect to the fund by putting another pressure point – long service gratuities – to bear by the same fund. So a fund that couldn’t service its primarily responsibility to make severance payments became worse in that it now had to service the long service gratuity payments in addition to the severance,” Dr. Harris told listeners to the popular radio programme.

At a media briefing in May of 2016, Dr. Harris said there exists a backlog of gratuity claims against the fund going as far back as 2009.

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