GO plc - Court Appeal

GO plc announced on 12 August 2008 that its attempt to prove that it was not liable to pay pensions to former Cable and Wireless employees failed as the Court of Appeal ruled that the company was meant to set up a pension scheme for those ex-Cable and Wireless employees who were transferred to Telemalta.  In 2002, these employees stated that when they were transferred from Cable and Wireless Limited to Telemalta Corporation it was agreed that the new entity would set up a pension scheme on the basis of the Pension Ordinance (i.e. being non-contributory and that the amount of the pension is set at a maximum of two thirds of the last salary of each employee concerned).

At that time, employees working with private companies were not entitled to receive the two-thirds’ pension that the government employees enjoyed.  This pension scheme was never set up even though it was referred to in the two subsequent collective agreements.  In the 1992-1995 collective agreement, the Union and Telemalta noted that the agreement superseded any previous ones.  The Civil Court found that Telemalta was liable to pay pensions to those employees who retired before 1992; however Maltacom, which by then had taken over Telemalta, appealed this judgement.  Last month, the Court of Appeal established that the 1992-1995 collective agreement was still in force.

GO plc, being the company which took over the rights and obligations of Maltacom have been given three months in which to set up a two-thirds pension scheme, based on the last salary of the employees involved.  GO is currently seeking legal advice in respect of the interpretation and implementation of the judgement and ascertain whether there is further legal redress and is also consulting with its financial advisors to quantify the potential financial impact this will have on the company.

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