THURSDAY, MAY 31: Dear Sir,

On behalf of Kentucky Fried Chicken (Bermuda) Limited (“KFCB”), please allow me to clarify the company’s position which has been inaccurately represented by the BIU and BTUC in the past week.

KFCB has not “agreed” to have outstanding issues with the BIU settled via binding arbitration. An “Agreement” should be just that – a contract where the contents have been agreed between the parties. Once freely agreed, the provisions of that Agreement should be honoured by all parties, including any provision for termination. A contract unwillingly imposed by a third party is not by any reasonable definition an agreement – it’s just an imposed contract.

KFCB is not changing its company name. Many months ago the company formed a new subsidiary: KFC Operations Ltd. (“KFCO”). The use of a parent holding company and operating subsidiary is common in Bermuda and throughout the world. KFCB’s desire to modernize its corporate structure to be consistent with global best practice is not connected to the company’s long running discussions with the BIU regarding labour relations matters. Nonetheless, in the spirit of openness and transparency, the BIU were advised of the formation of the new subsidiary and the intention that future operations and employment would be conducted via the operating subsidiary (and as such any new collective agreement would need to be in the name of the new subsidiary). KFCB does not recall the BIU expressing any objection to or concern with the planned change.

The BTUC has falsely claimed that KFCB’s corporate reorganization is an attempt “…to introduce a strategy to terminate an existing collective bargaining agreement...”. That claim is simply untrue. KFCB’s collective agreement with the BIU terminated nearly 6 months ago in accordance with that agreement’s contractual provisions. KFCB doesn’t need a strategy to terminate a collective agreement which isn’t in force and hasn’t been in force for months.

The BTUC has suggested that KFCB is violating a section of the Trade Union Act 1965 which requires an employer and a union to negotiate in good faith for collective bargaining. KFCB has consistently and publicly committed to participate in good faith negotiations with the BIU and continues to maintain that offer. Meanwhile, the BIU walked away from negotiations in March 2012 and has since publicly refused to return to negotiations unless some unreasonable and unnecessary preconditions are met. It seems clear that if any party is violating the terms of section 30L of the Trade Union Act 1965 it is the BIU.

The BTUC has never contacted KFCB seeking to confirm the accuracy of any claim made by the BIU nor to request an opportunity to raise any concerns it has with KFCB in order to hear the company’s response first hand. In the interest of achieving a balanced picture, KFCB has now invited the BTUC to discuss its concerns directly with KFCB before jumping to irrational conclusions based on half of a story.

The BTUC has gone on record expressing its “grave concern” about the possible consequences of KFCB’s success in seeking leave for judicial review. It is shocking to think that the BTUC would be opposed to a legitimate and transparent review of Bermuda’s laws by impartial courts. KFCB wishes to confirm it is now in receipt of an order from Bermuda’s Chief Justice granting leave for the Supreme Court to undertake a judicial review of Minister Minors’ decision to invoke involuntary binding arbitration. The court has stayed the proceedings of any arbitration panel pending the outcome of the judicial review process. KFCB welcomes this development and looks forward to having the court consider its submissions.

As the BTUC has expressed its concerns about the potential wide reaching consequences of a court ruling upholding KFCB’s position, it is perplexing that the BTUC is not encouraging the BIU to return to negotiations with KFCB in order to reach a fair agreement that meets the needs of the company and its workers. A freely negotiated agreement between KFCO and the BIU would eliminate the purpose of any involuntary arbitration proceedings and would likewise eliminate the need for the courts to review the matters that KFCB has placed before them.

In light of the court ordered postponement of any arbitration proceedings, and out of respect for the pending judicial review process, KFCB will voluntarily modify its reorganisation schedule so that certain employees may temporarily remain employed by KFCB while the court review process is underway. The remainder of our staff have assumed employment with KFCO from June 1st 2012.

To-date a majority of KFCB’s employees have indicated their willingness to voluntarily accept new statements of employment with KFCO. The company is grateful to the majority of its employees for their support of the company’s necessary restructuring. For the minority of workers who have not yet accepted KFCO statements of employment and have additional questions regarding KFCB’s restructuring, a staff meeting will be held within the next week to allow the company to provide any additional information and clarification those employees require.

KFCB’s intention is and always has been to offer fair employment terms to its staff which are as generous as reasonably possible and sustainable while providing a fair return to shareholders over time. The company does not and never has wanted to see its staff lose employment in a difficult economic environment. It is, in part, to ensure stability of employment that the company must make certain cost reforms.

It would be ironic if the company’s efforts to protect jobs resulted in employees becoming unemployed due to misunderstandings regarding employment rights and benefits. To try to ensure every employee has a fair opportunity to understand the reforms that KFCB is implementing and to receive the information necessary to choose to continue their employment via KFCO, a slight adjustment to the company’s reorganisation plans is appropriate. While this change in plans will result in some inconvenience and additional costs for KFCB in the short-term, it is the right thing to do at this time for the fair treatment of workers and the long-term viability of the company.

Sincerely,

Jason Benevides

Director

Kentucky Fried Chicken (Bermuda) Limited