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Labour Board halts conversion of pension plan pending union challenge


On September 13, 2021, Arnprior Aerospace announced that it intended to convert its pension plan from a defined benefit model, which had existed for many decades, to a defined contribution model. The company made the announcement in the of the term of the collective agreement. It did not provide notice to employees or the union, much less attempt to negotiate with the union, the International Association of Machinists and Aerospace Workers, Local Lodge 1542.

The differences between defined benefit to defined contribution pensions are significant. Under a defined benefit pension, plan members can depend on a regular and predictable retirement benefit. The employer must make the necessary contributions to preserve the “defined benefit” despite fluctuations in the market. In contrast, the employer’s only obligation with a defined contribution pension plan is to contribute a defined amount on behalf of employees to the plan. Members’ retirement income is left open to the whims of the market.

Years earlier, Arnprior Aerospace proposed during collective bargaining that the pension plan be converted to a defined contribution pension model. The union’s members strongly rejected the company’s proposal and were ready to strike over the issue. Instead, the parties averted a strike and settled the terms of the renewed collective agreement without amending the plan.

After Arnprior Aerospace announced in September 2021 that it intended to unilaterally convert the pension plan, the union filed grievances, launched a challenge with the Financial Services Regulatory Authority, and filed an unfair labour practice complaint before the Ontario Labour Relations Board. The union also filed a request for interim relief with the Board, requesting that the Board place the pension plan conversion on hold.

In a decision released November 8, 2021, the Board granted the application for interim relief, and ordered Arnprior Aerospace to cease taking any steps to convert the pension plan, pending adjudication of the unfair labour practice application on its merits.

In order to persuade the Board to issue interim relief, the union had to satisfy several criteria: that the union had an arguable case, that harm would result if the Board did not intervene, and that it was an urgent matter.

On the first criterion, the union argued that the employer’s unilateral conversion of the pension plan was an unfair labour practice because it interfered with the union’s capacity to represent its members and because it was a form of direct bargaining with individual employees, both of which are prohibited under the Labour Relations Act, 1995. The Board agreed that that the union had an arguable case, pointing to the pension plan references in the collective agreement and the past bargaining history where the union had rejected the company’s proposal to convert of the pension plan. The Board also said that Arnprior Aerospace’s decision to act unilaterally could amount to interference with the union’s representational rights.

With respect to the question of harm, the Board determined that the harm to the union’s reputational interests outweighed the financial risks to the company by maintaining the defined benefit plan. On the third criterion, the Board agreed with the union that there was a need to urgently address the issue.

The Board therefore sided with the union, and froze the conversion of the pension plan until it could be determined whether the employer’s unilateral action breached the Labour Relations Act, 2000.

This decision is notable in that the union was able to persuade the Board to use its powers to grant interim relief in somewhat novel circumstances. Most of the Board’s case law on interim relief has arisen in the context of union organizing campaigns or early on in collective bargaining relationships. While it remains to be seen whether the Board will uphold the union’s application on the merits, the union succeeded in convincing the Board to intervene to protect the status quo in the context of a decades-long bargaining relationship on the basis that the employer’s unilateral actions could cause serious harm to the union’s status as exclusive bargaining agent.

Ryan Newell and Gabe Hoogers represented the union in this case.