Canada: Pension Plans And Orphan Clauses: The Quebec Court Of Appeal Issues Its Ruling

In a recent decision,1 the Quebec Court of Appeal ruled on the matter of whether an employer could validly specify in the same collective agreement that employees hired as of a particular date will not have the same employee benefits and pension plan as all the other employees.


On November 1, 2002, Bell Actimedia, a subsidiary of Bell Canada, became an independent, publicly traded company, Yellow Pages Group Co. (Yellow Pages Group or Employer). At the time of the transaction, 1,500 employees, including 200 represented by the Syndicat des employées et employés professionnels-les et de bureau, Local 574, SEPB, CTC-FTQ (Union), participated in Bell Canada's very advantageous "Flex" benefits program and the Bell Canada defined benefit pension plan. Yellow Pages Group signed a first collective agreement with the Union effective from January 1, 2003, through June 30, 2005. A letter of understanding (LOU) stated that the Flex program would be maintained until July 1, 2005 "[translation] insofar as it applies to the employees covered by the agreement."

Concurrently with the Employer becoming an independent, publicly traded company, a strategy was put in place to favour Canada-wide expansion. Yellow Pages Group wanted to standardize the conditions of employment of its unionized and nonunionized employees and so it met with the Union to explain the programs it wished to implement. Most of the changes would affect employees hired after July 1, 2005, who would cease to receive post-retirement benefits. Also, employees hired after January 1, 2006, would be members of a defined contribution pension plan, instead of the defined benefit pension plan like the other employees. Lastly, employees already employed on July 1, 2005, but retiring after January 1, 2007, would have to bear the costs of certain post-retirement benefits.

The Union disagreed with the proposed changes and filed two grievances.

Arbitration award

The matter at the heart of the dispute, heard before arbitrator Frumkin, hinged on the interpretation of the LOU. The arbitrator therefore considered the context in which the LOU was signed and the way it was worded. He determined that its meaning and scope were clear: its purpose was to assure the employees that the benefits under the plans they participated in when the LOU was signed would not be changed to their detriment. It therefore applied to persons employed by Yellow Pages Group at the time the collective agreement was signed in May 2004 and to employees hired subsequently during the term of the collective agreement, i.e. before July 1, 2005.

Based on this, the arbitrator determined that the Union had no "valid reason" to object to the changes made to the employee benefits or the new defined contribution pension plan.

However, the arbitrator found that the Union was justified in objecting to the changes to the benefits for employees hired before July 1, 2005, and retiring after January 1, 2007, as those programs were not necessarily advantageous for that group of employees.

Lastly, the arbitrator rejected the Union's argument that the existence of different pension and employee benefit plans for employees based on their hiring date was contrary to section 87.1 of the Act respecting labour standards2 (ALS) and to sections 10, 16 and 19 of Quebec's Charter of Human Rights and Freedoms3 (Charter).

Decision of the Quebec Court of Appeal

The Union and the Employer appealed a Quebec Superior Court decision not to intervene – a decision made on the grounds that the interpretation of the LOU raised a matter that fell within the arbitrator's area of expertise and the Employer's decision was not contrary to the Charter.

The Quebec Court of Appeal also refused to intervene. In its analysis, the Court of Appeal discusses at length not only the grounds supporting the reasonableness of the arbitrator's interpretation of the LOU, but, particularly, the Union's argument that the arbitrator's decision was contrary to section 87.1 ALS and sections 10, 16 and 19 of the Charter.

Differences in treatment and section 87.1 ALS

The Union argued that the post-retirement benefits and pension plan were included in the section 1 ALS definition of "wages." The Union therefore maintained that by ceasing to provide post-retirement benefits and the defined benefit pension plan to employees hired after July 1, 2005, while continuing to provide those same benefits to employees hired before July 1, 2005, the Employer was introducing differences in treatment into the collective agreement that were based solely on the hiring date, something prohibited by section 87.1 ALS.

Pointing out that the interpretation of section 87.1 ALS fell within the scope of the arbitrator's decision-making mandate, the Court of Appeal held that "[translation] section 87.1 ALS prohibits discriminatory treatment solely based on the hiring date"4 with respect to labour standards prescribed in certain divisions identified by the ALS and, therefore, the scope of the prohibition did not include all conditions of employment. For the court, a restrictive interpretation essentially finding that the standard pertaining to "wages" covered only "wages paid in cash" but not the benefits having a pecuniary value that are employee benefits and pension plans, is not an unreasonable decision. Those benefits are part of "remuneration" and, consequently, the employees' conditions of employment, but are not part of the standard prescribed in Section I of Division IV.

In addition – although caution must be exercised in reading them – reference was made by the court to parliamentary debates in which the minister of labour at the time, Diane Lemieux, rejected a proposed amendment that, if passed, would have had the effect of extending the application of section 87.1 ALS to "[translation] any standard proscribed in a collective agreement." Referring specifically to pension plans and employee benefits, the minister rejected the proposed amendment on the grounds that it created a different plan for unionized employees by granting them protection for all conditions of employment included in the collective agreement but not granting the same protection to nonunionized employees.

Sections 10,16 and 19 of the Charter

Section 19 of the Charter states that an employer must, without discrimination, grant equal salary or wages to the members of his personnel who perform equivalent work at the same place. Section 16 states that an employer may not practise discrimination in respect of the conditions of employment on the basis of the age of the employees.

However, the arbitrator determined that there was no "[translation] basis for illegal discrimination covered by the Charter because granting greater benefits in an insurance plan to employees with more years of service by reason of said service"5 is one of the permissible distinctions under the Charter. The Court of Appeal concurred with the arbitrator's findings, holding that the evidence had not revealed a valid statistical comparison regarding adverse effects discrimination based on age, except by way of a general comment in an expert report to the effect that the new employees were "[translation] generally younger." The fact that new employees were "likely" to be younger did not prove, on a balance of probabilities, the existence of discrimination based on age.


Our takeaway from this ruling is that section 87.1 ALS covers only wages themselves and does not include all other benefits, including post-retirement benefits. An employer therefore cannot be prevented, on the grounds that such benefits are included in section 87.1 ALS, from converting its employee benefit plan and pension plan based on the hiring dates of the employees. This decision therefore clears the way for adaptation to market realities and a switch from defined benefit pension plans to defined contribution pension plans for a category of employees hired as of a particular date.

There is one caveat, however: while the Court of Appeal dismissed the Union's argument that the changes sought were contrary to the Charter, it needs to be kept in mind that it did so because discrimination based on age was not proven. Another case may come along in which such discrimination will be proven and not simply presumed.


1 Syndicat des employées et employés professionnels-les et de bureau, section locale 574, SEPB, CTC-FTQ c Groupe Pages Jaunes Cie, 2015 QCCA 918.

2. CQLR, c N-1.1.

3. CQLR, c C-12.

4. Groupe Pages Jaunes Cie et Syndicat des employées et employés professionnels et de bureau, section locale 574, SIEPB CTC-FTQ, AZ-50739052.

5. Ibid.

Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global legal practice. We provide the world's pre-eminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members ('the Norton Rose Fulbright members') of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
McCarthy Tétrault LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
McCarthy Tétrault LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions