In recent years, most employers who have Defined Benefit pension
plans ("DB" plans) are looking for ways to contain rising
costs associated with the DB plan and to maintain a level of
predictability with respect to contributions made to the
plan. In order to achieve this, employers are increasingly
switching to Defined Contribution pension plans ("DC"
plan) in an effort to achieve more predictable funding costs.
However, a unilateral change from a DB plan to a DC plan made by an
employer is not without risk in the unionized setting.
In virtually all pension plan documents, a clause exists which
gives the employer the unilateral right to amend, modify or make
changes to the pension plan, provided that the change does not
result in a reduction of accrued benefits to plan members.
Often times, employers in a unionized setting mistakenly believe
that this gives them the "green light" to go ahead and
make revisions to the plan, without union involvement, negotiation
or consultation. While there is arbitral jurisprudence to
support the position that in some cases, an employer will be
entitled to unilaterally amend plans from a DB to a DC plan without
union consent, case law confirms that before an employer makes such
changes, the language of the pension plan document must be
reconciled with collective agreement language.
The case of St. Mary'sCement v. United
Steelworkers, Local 9235 (Pension Plan Grievance), 
O.L.A.A. No. 152 ("St. Mary's") is a good
example that highlights the issues entailed when an employer seeks
to unilaterally switch its DB plan to a DC plan, without union
consent. In this case, the Company froze the defined benefit
portion of its employee's DB pension plan and introduced a DC
plan that would take effect a couple of months later.
Notice was given to the Union and employees of the change a couple
of months before it was to take effect.
The Union objected to the changes proposed on the basis of
language contained in the collective agreement which stipulated
that the Pension plan formed part of the collective
agreement. It further maintained that the inclusion of this
language prohibited the Company from adopting unilateral changes to
the plan because the pension plan was incorporated into the
collective agreement and effectively secured the "defined
benefit promise". The Company, on the other hand, agreed
that the Pension plan was incorporated into the agreement, but
maintained that it had the unilateral right to amend or modify the
plan, as provided for in the pension plan.
In reviewing the arguments put forth by the parties, Arbitrator
Hunter agreed with the Company and found that there was no express
provision in the collective agreement that conflicted with the
pension plan text giving the employer the unilateral right to
amend. Not only was there no conflicting language, there was
language in the collective agreement which expressly stated that
"the Company intends to maintain the Plan indefinitely, but
reserves the right to amend the Plan or discontinue the plan either
in whole or in part at any time". In the
arbitrator's view, if it were to find in favour of the Union,
it would effectively have to "read out" this language
from the collective agreement. On this basis, the Company was
able to unilaterally amend the DB plan to a DC plan.
Although this case is favourable to employers, a word of caution
is warranted. The result in this case is limited to the
specific facts presented to the arbitrator, and turned on the
specific language of the collective agreement. It is clear
from a review of the case that the collective agreement language
specifically permitted the employer to amend the plan. This
may not be the case in the context of other collective
Before deciding to make any unilateral changes to a pension plan
in the unionized context, employers should carefully assess the
language of the collective agreement, pension plan text, and
consult with its actuaries to determine whether any change to the
pension plan will result in a reduction of accrued benefits to plan
members. Given the complexity of pension language contained
in many collective agreements and pension plan documents, it is
also advisable to seek legal advice before an employer unilaterally
makes any changes to its pension plan. In this regard, the
lawyers at CCPartners can assist employers in navigating through
this complex area of the law.
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.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).