In 1987, the Hudson's Bay Company (HBC) sold the assets of
its Northern Stores Division (NSD) to the North West Company (NWC).
The NWC made offers of employment to the NSD employees and agreed
to provide a defined benefit plan with equivalent benefits and
recognition of prior years of service. HBC transferred the plan
assets attributable to the transferred employees to the NWC pension
plan but did not transfer a proportionate share of the surplus. The
transferred employees alleged that the pro-rata share of surplus
should have been transferred as well.
The Supreme Court of Canada noted that plans may impose stricter
requirements than specified by the legislation. In this case,
however, the plan text expressly limited members' entitlements
to their defined benefits. Although the 1984 trust agreement
contained exclusive benefit and non-diversion language, the Court
held that the trust agreement must be read with the then-existing
terms of the plan, which (unlike Schmidt v. Air Products Canada
Ltd.) expressly gave HBC the right to any surplus on plan
termination. Therefore, the company was not required to transfer a
pro-rata share of surplus. Interestingly, the Court commented on
the legitimacy of the transaction, noting that the purchase price
of the assets, including the pension plan surplus, was negotiated
and the NWC was not willing to pay for the surplus.
The Court also affirmed its decision in Nolan v. Kerry
(Canada) Inc. (2009), stating that without a statutory or
common law requirement for the employer to pay plan expenses, any
obligation to do so must arise from the text and context of the
plan documentation. The plan documentation did not impose this
obligation and, accordingly, plan expenses could be paid from the
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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