PricewaterhouseCoopers (PwC) has explained that no funds have been set aside for employee severance payments for the 1356 staff of the defunct UT Bank and Capital Bank whose employment automatically terminated on August 14, 2017 following the purchase and assumption by GCB Bank.
Rather, according to PwC, the employee severance claims will be admitted into the pool of creditor claims in the receivership and payments made to them based on the timing and quantum of asset realisation, as well as cost incurred in the receivership and quantum of claims received.
It said negotiations on severance entitlements will be done with the employee Union representatives.
PwC gave the response to a Graphic Online question on how the severance claims for those affected by the terminations would be paid.
All the 1356 staff of the defunct UT Bank and Capital Bank, made up of 689 from Capital Bank and 667 from UT Bank have since received letters informing them of how the receivership under the purchase and assumption affects them.
Pursuant to Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the Bank of Ghana on August 14, 2017 revoked the operating license of UT Bank Limited and Capital Bank due to severe impairment of their capital.
BoG in accordance with Section 123 (2) appointed two individuals, Messrs Vish Ashiagbor and Eric Nana Nipah both Directors of PwC as Joint Receivers.
The implication of the receivership on employees’ contracts is that their existing contracts with Capital Bank and UT are automatically terminated on the August 14, 2017 date of receivership.
This however, paves the way for GCB Bank to re-negotiate their terms of engagement.
Already GCB has explained that it would use the next six months to assess the skills of all staff of the two defunct banks and determine who amongst them would be retained.
GCB will subsequently issue new formal contracts to staff they wish to retain after they have done their due diligence on staff.
In the meantime, to date, all staff have been retained by GCB.
In a letter dated August 31, 2017 and sent to staff of the former UT Bank and Capital Bank, PricewaterCoopers explained how the receivership affects them.
“Your contract of employment with UT has been terminated as a result of the receivership effective 14 August 2017. Any claim you have against UT such as arears of salaries, wages, leave, severance pay and other entitlement will be dealt with in accordance with the provisions of the Labour Act, 2003 (Act 651) and the Banks and Specialized Deposit Taking Institutions Act, 2016 (Act 930),” a letter to one of the affected staff which has been seen by Graphic Online stated. (A copy of the letter in the picture below)
It added: “Kindly note that your claims are against UT and not the Joint Receivers. The Joint Receivers act on behalf of UT.”