Early retirement incentives can add up, says former labour leader

It can cost a lot of money to buy out a retiring worker, says a former head of the Newfoundland and Labrador Federation of Labour.

Bill Parsons says the benefits offered to non-union staff are aimed at recruiting and retaining managers.

Parsons did some math for the St. John's Morning Show Wednesday, after city council released a detailed breakdown of what it paid out through an early retirement program for five deputy city managers and 24 others.

While the average buyout cost $220,000, two deputy city managers received more than $500,000 and the total paid out was $7.1-million.

Parsons said employees at the end of their career would be compensated for lost salaries, based on the number of years left before they can collect a pension.

He said they would be paid severance — a percentage of their salary — owed, vacation time, and sometimes accumulated overtime.

Employees who began working with the city prior to 1980 were also permitted to accrue sick leave, which was also factored into the cost of the buyouts.

Typically, employees are not paid for their sick leave.

"The problem with these benefits is mostly control. These benefits can run away with you," said Parsons.

Parsons said unionized workers, especially public servants, are also entitled to benefits even though former premiers and other politicians have tried to remove them.

"The government has been after sick leave for many, many years now for people who are paid by the public purse," said Parsons.

"When Premier [Clyde] Wells came into office, he threatened teachers to take away their severance pay and then backed off."

It's happened at the federal level too, he said.

"Stephen Harper legislated out of the collective agreement their sick leave benefits. Now I see that Prime Minister (Justin) Trudeau has recanted on that."

Coun. Art Puddister expressed concern Monday about the cost of early retirements, saying he is worried it may set a precedent that the city can't afford.

Mayor Dennis O'Keefe said the buyouts are supposed to save money in the long term, about $3-million over the next two years.

However, he cautioned that contracting out work previously done by staff would eat into those savings.