Cathay Pacific Wants to be Right, Not Kind as it Cuts Benefits for US Staff
Sometimes, it’s better to be kind than to be right.
The quote applies to Cathay Pacific as it realized it was paying contributions to social security and health insurance programs of US-based cabin crew for several years. It turns out that it is exempt from doing so as a non-American employer with staff working on a non-US registered aircraft. CX chose to be right, and follow the law, while forfeiting goodwill and kindness to its employees using an excuse widely acceptable to its stakeholders.
“We understand that we have no alternative but to comply with the US tax law and regulation,” the airline told staff in a letter, quoted by South China Morning Post.
As a result, the company will discontinue payment of such benefits, and will save US$1 million a year in contribution. However, according to the SCMP article, it denied the move was motivated “due to any cost concern”.
While crew members who made social security contributions over the past years could opt to withdraw them — forgoing their eligibility for benefits — employees needed at least 10 years of contribution to draw benefits, said the US Association of Flight Attendants.
Taylor Garland, an AFA representative, said while Cathay’s move was legal it had demonstrated an absence of goodwill and “any sense of responsibility”.
“We are trying to help the cabin crew but some of this damage … could have a permanent impact that they will not be able to change and they have had no say on the matter,” Garland said.
Cathay Pacific has 10,000 cabin crew members and the US is its second largest base.