As discussed in our last A.M. Pension webinar, the province of Québec recently enacted legislation that impacts the ability of a pension and benefit plan sponsor to amend its pension and benefit plans with respect to Québec employees. This article will discuss the Québec Restrictions on Amendments to Pension and Benefit Plans.
In June 2018, the Québec government passed Bill 176, An Act to amend the Act respecting labour standards and other legislative provisions mainly to facilitate family-work balance (“Bill 176”). Bill 176 made a number of changes to labour standards legislation which are beyond the scope of this post. For a discussion of those changes, please refer to this article. In this blog post, we discuss the new legislation in terms of its application to pension and benefit plans.
Impact on Pension and Benefit Plans
Effective June 12, 2018, Bill 176 amended section 87.1 of the Act respecting labour standards by adding this new provision:
Any distinction made solely on the basis of a hiring date, in relation to pension plans or other employee benefits, that affects employees performing the same tasks in the same establishment is also prohibited.
In other words, as a result of Bill 176, hiring-date distinctions in pension and benefit plans are prohibited in respect of Québec employees. For example, a provision in a pension plan, regardless of where that plan is registered, which provides that Québec employees hired on or after a certain date are eligible to participate in the defined contribution provisions of the plan and employees hired before that date are eligible to participate in the defined benefit provisions of the plan is now prohibited. In addition, provisions in respect of Québec employees that impose different rates of employee contributions to a pension plan or provide different types of benefit plan coverage under a benefit plan are prohibited, if such distinctions are based solely on the employee’s date of hire.
A Québec employee who believes that he or she has been treated differently in respect of a pension or benefit plan, based solely on date of hire, may file a complaint with the Québec Commission des normes within 12 months of the distinction becoming known to the employee. The Commission may then refer the complaint to the Québec Administrative Labour Tribunal which may, in turn, render “any decision it believes fair and reasonable,” including ordering that the distinction no longer be made or that the employer pay the employee an indemnity for the loss resulting from the distinction.
While there is no doubt that this new prohibition will impact the ability of a pension and benefit plan sponsor to amend its pension and benefit plans in respect of Québec employees, there is some good news for plan sponsor employers. The prohibition is not retroactive, meaning that hiring-date based distinctions under pension and benefit plans that were in force prior to June 12, 2018 may continue to apply. In addition, the prohibition does not apply to federally regulated employees nor does it prevent other distinctions, such as distinctions based on the location of the employer’s establishment or class of employees. Nonetheless, employers with Québec based employees should be aware of the new prohibition and consider its potential impact before making any changes to pension or benefit plans.
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