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HomeMy WebLinkAboutUnion 13-05-28 IN THE MATTER OF AN ARBITRATION BETWEEN: Pathways to Independence and OPSEU (Pension Grievance) Before: William Kaplan Sole Arbitrator Appearances For the Employer: Amanda Hunter Hicks Morley Barristers & Solicitors For the Union: Erin O’Hara Legal Counsel OPSEU A hearing in this matter was held in Belleville on May 22, 2013. 2 Introduction This case concerns a pension dispute between the parties. At their request, it is being resolved pursuant to the grievance and arbitration provisions of the collective agreement. None of the background facts are in dispute. The case proceeded to a hearing held in Belleville on May 22, 2013. The Background Facts The Staff Pension Plan for Employees of Pathways to Independence (hereafter “the Plan”) was created effective September 17, 1990 through a transfer of assets and past service liabilities from the Public Service Pension Plan. It was a defined benefit plan covering both unionized and non-unionized employees. In 1997, Amendment No. 5 was adopted to permit enhanced terms for the Executive Director as a separate employee class. It was referred to as Supplement Number 1. The Executive Director was granted non-contributory status and enhanced early retirement benefits. On April 1, 2009, the parties entered into a new collective agreement. They agreed, among other things, to investigate the feasibility and viability of transferring the Plan to the OPSEU Pension Trust. It is fair to say that there was a solvency crisis. Indeed, the very future of the pension plan was in question. The employer wished to take advantage of solvency funding relief provided for under applicable regulations introduced by the provincial government in June 2009. As the employer noted in its first written proposal to the union: “The Pathways pension plan is in crisis.” In addition, there were outstanding FSCO complaints regarding the enrolment of part-time employees in the Plan. The 3 parties entered into negotiations. Legal counsel and actuaries were engaged. Proposals were exchanged. In January 2010, after some months of discussions, the union proposed and the parties agreed, to joint sponsorship and governance of the Plan. In the result, the parties decided to implement a Jointly Sponsored Pension Plan. Various written documents were exchanged and a final agreement executed on April 28, 2011 A “New Pension Plan” was created by the Memorandum of Agreement Establishing Joint Governance of the Staff Pension Plan for Employees of Pathways to Independence (“the Memorandum of Agreement”). The New Pension Plan was filed with FSCO. After filing, Standard Life began the process of preparing a valuation report. This report identified enhanced retirement benefits for the Executive Director. In due course, the union filed a grievance: “The Union grieves that the Employer has failed to abide by the settlement reached between the parties on April 28, 2011 regarding the pension plan, by not ensuring that the Executive Director’s early retirement provisions are contingent like every other member of the pension plan….” This is the dispute that has proceeded to a hearing. Submissions In the union’s view, while there might have been an administrative or clerical oversight, there was no dispute about what had occurred from a legal perspective. Article 3.5 of the Memorandum of Agreement provided: 4 Following execution of this Agreement, the Plan shall be amended by the Employer such that it contains the following provisions: …. (e) The automatic nature of the unreduced early retirement benefit provided in the Plan as of the date of this Agreement shall be terminated effective April 30, 2013 and replaced by a contingent benefit…. …. (f) Effective May 1, 2013: … (ii) Any member of the plan whose continuous employment has not ceased and who is eligible to retire under the terms of the Plan may apply to the Committee within the time frames specified by the Committee, for an unreduced early retirement pension (“UER pension”), provided he or she meets the applicable eligibility requirements for an unreduced early retirement pension specified in the Plan text. Any application for an UER pension shall be approved if the additional liability to the Plan from the granting of the UER pension to all applicants in the year can be financed by application of the Early Retirement Reserve. If in a year the Early Retirement Reserve does not contain sufficient assets to support the granting of the UER pensions to the applicants, the Committee, may in its discretion, grant a special early retirement pension to the applicants that is not unreduced but provides for a reduction that is less that (sic) the reduction described in (iv), subject to all other terms of paragraph 3.5(f). Union counsel took the position that this provision effectively eliminated Supplement Number 1. The Memorandum of Agreement amending the Plan and creating the New Pension Plan could not be more clear. It applied to “any member” and that included the Executive Director. While the Executive Director, at one point, enjoyed preferential treatment, in the transition from an employer- run to a jointly governed pension plan, the special treatment, which previously included no obligation to make contributions, came to an end. So too did enhanced early retirement opportunities. Had the parties wished to carve out continued special treatment for the Executive Director, they could have easily done so. “Any member” was completely inconsistent with the Executive Director 5 retaining preferential treatment. Article 6.1 of the Memorandum of Agreement was an entire agreement provision and it was axiomatic that a specific provision like Article 3.5 amended the entire Plan. A number of authorities were advanced in support of these submissions. Accordingly, and for all of these reasons, the union asked that the grievance be allowed and that an appropriate declaration issued. For its part, the employer took the position that both parties were well- represented by legal counsel and actuaries. Various drafts were exchanged and numerous discussions held. Had the parties wished to eliminate Supplement Number 1, they had ample opportunity in which to do so. Significantly, while other changes were made, no changes were made to the early retirement entitlements of the Executive Director. In the same way that specific language is required to confer a financial benefit, equally specific language was required to eliminate one. Moreover, given the overall regulatory framework providing for notification of entitlement changes – and no such notice was given in this case to the Executive Director – the conclusion was inescapable that Supplement Number 1 remained in full force and effect. The employer asked for a declaration to that effect. Decision Having carefully considered the evidence and arguments of the parties, I am of the view that the grievance must be allowed. The language of Article 3.5 of the Memorandum of Agreement is clear. It applies to “any member” and that means it also applies to the Executive Director. It then imposes limitations on early 6 retirement. The reason that it does so is obvious. The Plan, as the employer openly acknowledged, was in crisis. Its very future was in doubt. The decision was ultimately made to transition to a jointly governed plan. As part of that transition, membership contributions, as the Memorandum of Agreement makes clear, dramatically increased. The Executive Director, who previously was a non- contributing member, was required to start contributing. It is completely inconceivable, from a collective bargaining standpoint, that OPSEU members, who form the overwhelming majority of members of the Plan, and the New Pension Plan, would ever agree to shoulder increased contributions to meet a multi-million dollar deficit and would also agree to changes that saw their future benefits lowered, and would do so while the Executive Director, at their expense, continued to enjoy unfettered access to early retirement. The situation was self- evidently different when the employer was the sole plan sponsor. While it might have been preferable, advisable, even arguably a best practice, to make it even more clear that the Supplement Number 1 was being eliminated, there was no actual need to do so given the clear and overriding language of Article 3.5. The Executive Director is a member like every other member and that provision applies equally to every member. By necessary implication it nullifies Supplement Number 1. The fact that Supplement Number 1 continued unchanged in the text from one iteration to another to the final draft as the details were being hammered out is, given the language of the Memorandum of Agreement, and its clear and unambiguous intention, of neither legal nor factual significance. 7 It may very well be that there are contractual and other obligations to the Executive Director. That obviously is not a matter between these parties. There may equally be regulatory compliance issues such as notification that arise as a result of this award. Accordingly, it is therefore appropriate to allow the grievance and to remit to the parties the implementation of my declaration. Should they encounter any difficulties, they can bring that issue back before me. DATED at Toronto this 28th day of May 2013. “William Kaplan” ____________________________________________ William Kaplan, Sole Arbitrator