Quebec employers are expressing concern about the business impact of the province’s move to eliminate disparities in pension and supplementary group benefits plans.

“It’s an issue of attractiveness of foreign investments because we’ve heard from companies that, should this situation be passed here, they could reconsider their investments in Quebec,” says Guy-François Lamy, vice-president of labour and legal affairs at the Conseil du Patronat du Québec, which represents Quebec employers.

The comments come as Quebec’s premier, Philippe Couillard, has indicated the government is planning to act following a recent motion by Quebec’s national assembly asking the province to table a bill that would eliminate disparity clauses in 2018. The motion followed recommendations of a working group formed by the Quebec government more than a year ago in response to criticisms raised by unions, which argued the province should prohibit the disparity clauses in the same way it does for other aspects of employee working conditions.

Read: Quebec smelter employees reject proposal for two-tiered pension plan

Quebec is the only province to ban disparities with respect to certain working conditions, says Julien Ranger, a Montreal-based partner at Osler Hoskin & Harcourt LLP, noting it has prohibited such clauses based on hiring date that have an effect on salary, work duration and paid holidays since the early 2000s.

However, one type of disparity that still exists is that some employers offer a defined contribution pension to new employees, while workers hired previously are able to participate in a defined benefit plan. Another common disparity is to offer post-retirement benefits only to employees who joined before a certain date. The recommendations present two options for eliminating the disparities: offer the same type of plan for all employees or an equivalent arrangement for everyone.

In early December, eight Quebec unions signed a letter to La Presse stating their support for the changes and noting that the disparity clauses undermine intergenerational equity in the workplace. “Let us be clear, the campaign we have been running for nearly a decade to completely ban disparity clauses is not intended to legally require employers to offer a pension or supplementary insurance plan,” the letter stated. 

In our labour relations system, it is up to the parties to negotiate whether or not there will be a pension plan and what kind of pension it will be. What we are insisting on is that the government clarify the boundaries of this negotiation.”

Read: Union-led, multi-employer pension considering transition to target-benefit plan

Lamy says the equity question is an issue particular to Canada and to Quebec. “When we speak to some of our employer members that are from international corporations, in the U.K., for example, or the U.S., they took the decision to simply close those regimes,” he says, referring to defined benefit plans.

“The thing here is that they decided, out of respect for their current employees, to say to them, ‘We’ve committed to a defined benefit plan and we’ll respect that commitment, while for the future, we cannot assume that risk and we’ll provide other regimes, normally defined contribution plans,’” says Lamy. “Employers, by wanting to be fair to their current employees at the time they took that decision, they are now being accused of being unfair and they feel it’s a little awkward, a little odd because the other decision would have been to simply close the defined benefit plan.”

The working group also recommended that Quebec wait for other provinces to consider similar legislation before introducing the changes. Couillard initially said that for Quebec to go ahead with legislation, another large province, ideally Ontario, would have to do so as well, reported La Presse. But the premier changed his mind in early December, confirming the reform of the labour standards, to be introduced in February or March, would eliminate disparity clauses.

Read: Plan sponsors favouring group RRSPs, DPSPs over DC plans

“We are hearing in the industry that Quebec is going ahead with the proposals and will introduce legislation,” says Ranger.

For Lamy’s organization, the participation of other provinces isn’t the central issue. “Yes, it’s important to be at par with other provinces in terms of legislation if we want to be at a certain fair competition for employers. The real issue is what I mentioned before: We should clearly understand the issues at stake here, and it’s not about making sure all other provinces do it,” says Lamy.

Read: Plan sponsors urged to consider key distinctions between DB, DC plans

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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