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Unions Side With WorldCom Staff

Sep 10, 2002 | BBC

The biggest union federation in the US is backing more than 4,000 non-union ex-employees of WorldCom in their fight for $36m (£23m) in severance pay.

The AFL-CIO, which has 13 million members, filed evidence in support of former staff at the bankrupt telecoms company.

This comes as the company's board is reported to be considering stripping former chief executive officer Bernie Ebbers of some of his multi-million dollar payoff.

According to the Wall Street Journal, the package - which includes easy terms for the repayment of company loans, $1.5m in annual retirement pay and use of the company jet for life - could be altered because it was awarded only just before bankruptcy protection began.

No longer members-only

The package is in stark contrast to the trouble WorldCom staff are having getting even a slice of their payoff for losing their jobs, the AFL-CIO said.

"We're responding to what's gone wrong with American business," AFL-CIO president John Sweeney said from the steps of the US Bankruptcy Court in Manhattan, where the workers' case will be heard on 1 October.

Only 425 of WorldCom's 63,900-strong workforce were union members before the bankruptcy, but Mr Sweeney said he hoped that by helping the 4,143 who have been denied full severance, they may be encouraged to join unions in the future.

The organisation has already won extra money for former employees of Enron, the disgraced energy giant which collapsed amid stories of offshore accounts used to hide billions of dollars of debt.

Back of the queue

In the WolrdCom case, though, the company and the unions are on the same side.

The company is petitioning the court to allow it to pay everything it owes in medical insurance, vacation pay and severance.

But legally speaking, a company in bankruptcy protection caps severance at $4,650 for each employee.

Beyond that, those owed severance pay are at the back of the queue when a company goes bankrupt, with holders of WorldCom's bonds, such as Deutsche Bank and AOL Time Warner, taking precedence.

Most of the 4,143 workers involved in the suit have yet to receive any money, according to court filings - not even the $4,650.

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