General Motors of Canada was “not contractually entitled” to cut retirees’ healthcare and life insurance benefits, the Ontario Superior Court of Justice has ruled.
During the financial crisis, the automaker made changes to the benefits program for non-unionized salaried retirees. They were forced to pay more for prescription drugs and saw their annual maximum coverage for dental and orthodontic benefits reduced, and the basic life insurance benefit was cut to $20,000 from more than $100,000.
In May 2010, the former white-collar workers filed a suit against GM Canada, alleging that the company violated its contractual obligations.
In his decision, Justice Edward Belobaba wrote that the salaried retirees “were told repeatedly in the benefits documents that they could rely on the promised healthcare and life insurance benefits.”
“Surely, they said, GM’s right to make changes to the benefits programs didn’t mean that GM could cut retirement benefits after retirement. If that’s what the company intended, they argued, GM should have told them while they were still working, in language that was clear and unambiguous.”
A GM spokesperson says the company is disappointed by the ruling and plans to appeal.
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