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CCCA_V6No4_Dept-PensionsLaw-FIN_CCCA_V6No4 11/26/12 2:11 PM Page 10 Pensions Law Navigating the uncertainty of post-retirement benefit changes By Jonathan Marin in determining what the Court concluded that the communi- constraints, if any, cations merely described benefits offered apply to an employ- by the employer as they existed at the er seeking to reduce time, as opposed to providing a promise or eliminate PRBs. for future benefits. The Court of Appeal went on to find Determining whether PRBs that the right to “premium-free” benefits ollowing the Supreme Court of have “vested” at retirement had not “vested,” either on a contractual 1 FCanada’s decision in Dayco , it has In Bennett and Weyerhaeuser, both class- analysis or under the applicable statute,and been generally accepted in Canadian action proceedings, certain retirees that the employer was entitled to make law that an employee can, on his or her objected to changes to their retirement amendments after the retirement date of retirement, “vest” in an entitlement to benefit programs, including changes the class members. While the discussion in post-retirement benefits (PRBs). In the requiring the retirees to make premium Bennett on the impact of employee com- almost 20 years since Dayco there has contributions for their PRBs (where pre- munications is useful, the decision may be been an absence of decided Canadian viously the benefits were wholly funded limited in its application for employers due cases to help answer questions such as: by their employer). to the fact that the provision of PRBs was What is needed to establish a vested In Bennett, the PRBs in question were governed by legislation. right in PRBs? What reservation of provided pursuant to legislation and the In Weyerhaeuser, the PRBs were not rights language is sufficient in order to plaintiffs were unsuccessful in challenging provided by statute. In this case the B.C. ensure that an employer can amend or PRB amendments effected through a Supreme Court reached a much less terminate PRBs? Is it permissible to change in the applicable regulations. The “employer-friendly” conclusion. The make modifications to a vested PRB Court of Appeal agreed with the trial plaintiffs alleged that the PRB amend- (such as changes to a deductible that judge’s finding that the PRB communica- ments constituted a breach of contract.As applies to a PRB)? For employers seek- tions were not part of the employment the employees did not have written ing to address costs associated with agreement. Since these communications employment contracts, the B.C. Supreme PRBs, the absence of judicial guidance were made to retirees and individuals who Court first considered whether the PRBs on these issues has created consider- were to imminently retire (rather than were gratuitous benefits or provided as able uncertainty. new hires) the Court of Appeal agreed part of the employees’ compensation Three recent cases on proposed PRB that the statements concerning PRBs in packages. The Court, relying heavily on 3 2 amendments — Bennett , Weyerhaeuser and these communications “were not promises employee communications, concluded ISTOCKPHOTO.COM 4 Gustavson — have painted a clearer picture and that, if they were promises, no consid- that retirement health benefits were pro- of the factors judges will consider relevant eration was given for them.” In addition, vided as a form of deferred compensation 10 CCCA Canadian Corporate Counsel Association WINTER 2012