Employer’s prior conduct prohibits pension plan amendments, despite collective agreement terms: Ontario court
Court agrees with arbitrator that an employer’s conduct might limit its discretion to amend a pension plan
Benefits Canada spoke to Simon Archer about a recent Ontario Divisional Court ruling that determined that an employer’s prior conduct might limit its ability to amend its employee pension plan, even if the collective agreement allows the employer to do so.
Nova Chemicals Canada Ltd. decided to freeze the defined benefit component of its pension plan from December 2021 to the expiry of the collective agreement in March 2023. Unifor Local 914 grieved the decision.
An arbitrator held that the collective agreement allowed the employer to take the action, but determined that it should be estopped from doing so until the current agreement expired. The arbitrator reached this conclusion on the basis that the employer had previously represented that it would maintain the plan until the retirement of the members who had decided to remain in the defined benefit plan. Moreover, that promise had led the union to pass up an opportunity to deal with the matter in collective bargaining.
The employer sought judicial review, but the Divisional Court upheld the arbitrator’s decision.
Simon Archer had this to say about the decision:
Simon Archer, a pensions and labour law partner at Goldblatt Partners LLP who also wasn’t involved in the case, says not all remarks concerning the application or interpretation of an agreement amount to a “representation.”
“Mere casual remarks do not attract the doctrine of estoppel. The court made it clear that the representation must be clear and unequivocal, that it was intended to and did affect the parties’ legal relations, that the party receiving the communication relied on it by doing or not doing something and would have acted otherwise but for the representation and that the reliance is detrimental because the situation cannot be restored to what it was when the representation was made.”
However, it’s of some significance that the arbitrator prohibited the company from amending the plan only until expiry of the current collective agreement. “That’s the way it should be because collective bargaining is the place where these types of issues should be addressed,” says Archer.