This is Why - Part Two
Individual Selection
The breakdown of negotiations and the sackings of 9th July may have been unexpected to many union members, but the events of last summer were no accident. We know now that management was planning how to implement their attack on the pilots for months prior. Firstly, they needed to compile data on likely individuals and this commenced in November 2000. By introducing a Sickness Management Program they compiled statistics on pilots who were unfit for work. Secondly, by questioning Crew Controllers and administrative personnel, they compiled anecdotal data for later use. Finally, by interviewing managers and others, they compiled a “hit list”.
Consequently, a meeting was held, colloquially termed the “Star Chamber”, with about 20 individuals from Flight Operations, ISD, Airport Ground Staff, Engineering, Crew Control and Crew Scheduling. They considered 85 names on the list to be fired. They then discussed each name. If no one advocated keeping the officer employed, he was chosen for termination. If anyone denigrated the officer, he was fired. If someone spoke up in favour of the officer, he was retained. This was the most biased and venal 'kangaroo court' in corporate history. Apparently, in some cases, the most 'damning' thing that was found on an individual’s record was a few sick days with supporting doctors’ notes or a 'difference of opinion' with a manager. Management had now created The 49ers.
Welfare
Knowing the probable tactics involved in a union bust attempt, the Association had recommitted to the welfare of victimised pilots and their families before initiating LIA. The four basics (“The Big Four”) of food, housing, education and medical needed to be covered. However, the first priority was to attend to the psychological impact on the group welfare of the sudden loss of career and income. The 49ers were formed into a self-administering group by assigning various individuals basic roles. They understood the importance of remaining cohesive and united. Indeed, the future of the Association quite literally depended on how they endured.
The General Committee did not have the capacity to deal with the sudden influx of work whilst simultaneously meeting the needs of the rest of the Association. The advantage of self-administration included time (all 49ers were immediately available 24/7, whereas other pilots had a full work schedule), motivation, skill level (9 of The 49ers had Committee experience and knew how the system operated) and expertise (any group of pilots contains a broad cross-section of additional skills such as accounting, tax and law). Additionally, The 49ers set up their own counselling and support groups.
Financial Impact – 49ers
All of The 49ers were contractually entitled to a minimum of 3 months’ salary in lieu of notice. In fact, management withheld payment of such funds on the pretext of possible tax liability. Management then informed the Inland Revenue Department (IRD) that all of The 49ers were leaving Hong Kong; the result was that the IRD issued immediate tax demands to be paid within 7 days irrespective that many of The 49ers are permanent residents of Hong Kong. When some of The 49ers approached the IRD they were initially treated sympathetically and told that the tax demands could be held over provided they were not leaving Hong Kong. However, as soon as the officials found out that they were “the Cathay pilots”, they immediately changed their stance and insisted that the demands be paid in full by the due date.
The situation was worse for based officers who used their crew mailboxes as their IRD contact address. Management returned their tax demands to the IRD as “address unknown”. Thus, these officers did not know they had outstanding tax demands. Failure to pay tax demands by the due date can result in significant financial penalty. Only 2 of The 49ers were not subjected to this treatment by the IRD and both have Chinese names.
Management further exacerbated circumstances by misreporting The 49ers’ income. The payment, purportedly in lieu of notice, was reported as income and therefore taxable, whereas payments in lieu of notice are actually non-taxable. Similarly, management reported housing assistance and travel allowance as fully taxable income. The result was that The 49ers received tax demands far in excess of their actual tax liability but they still had to pay them immediately. Despite the IRD’s alacrity in issuing these demands, some 49ers have still not been repaid money owing.
Financial Impact - Association
Consequently, because of the tax demands and the withholding of the pay in lieu of notice, the Association had an immediate drain on resources to meet members’ initial needs. Fortunately, the Association had begun accumulating contingency reserves 5 years earlier, and was able to manage The 49ers’ needs without threatening its own solvency by making short-term loans to them.
The 49ers, despite a 100% salary and benefits cut and inflated tax demands, were expected to be “self-funding” for the first 3 months. Thereafter, the Association adopted financial responsibility for their welfare. Combined with the increased day-to-day union running costs due to the dispute, at the Annual General Meeting on 26th September, the Membership voted to increase union subscriptions from 1% of salary to 5%.
A sub-committee was immediately formed to evaluate the ongoing financing of “The Big Four”: food, housing, medical and education,. A simple policy resulted which catered for subsistence calculated as a multiple of The 49ers’ individual union dues. In other words, pilots who had higher income paid greater union dues and received greater subsistence; this reflected that the day-to-day needs of an older pilot was probably higher than that of an average junior member. If a pilot was based in an area with free education, then no subsistence towards schooling was paid. Housing was complicated by Hong Kong’s high costs but flexibility produced manageable costs to the union. A competitive medical package was obtained which benefited from a group discount.
Reverting to a lifestyle that focused on the essentials underscored the philosophy of “The Big Four” policy. From the beginning, nine of the 49ers have taken no assistance and many have taken well below their allotment. As the dispute continued, some pilots moved out of Hong Kong and some have been able to secure alternate sources of family income, while others found creative ways to reduce their needs. Consequently, The 49ers’ subsistence continues to decline and is now more than 40% below budget.
Legal Protection
Hong Kong is not renowned for its advanced employee and labour protection legislation. For example, legislation, belatedly introduced prior to the return of Hong Kong from British to Chinese rule in 1997, was repealed almost immediately after the handover. The Government is openly pro-business and the legal employment protections reflect this stance. Considering these limitations, the Association investigated how best to effect legal remedy to the dismissals.
The result was that The 49ers were divided into 4 groups for individual claims. The 4 groups are divided into 4 jurisdictions with different causes of action:
Hong Kong 23 plaintiffs Unlawful dismissal, breach of employment contract, breach of Employment Ordinance
United Kingdom 12 plaintiffs Unfair dismissal
Australia 5 plaintiffs Unfair contracts under Industrial Relations Act
United States 8 plaintiffs Wrongful termination in violation of public policy, Libel per se
Additionally, the union officers and officials who believed that they had been discriminated against due to their union activities made a formal complaint to the Labour Department. After investigation, the Department of Justice (DoJ) decided not to proceed with a criminal prosecution against individual managers. Given the burden of proof required in a criminal complaint, the DoJ felt that it did not have sufficient evidence to assure a high probability of a successful prosecution.