Canadian HR Reporter

CANADIAN HR REPORTER JUNE 2018 10 NEWS "You don't necessarily have to treat everybody exactly the same but you should be able to demon- strate that it's of a similar financial value, so you don't have two differ- ent populations that have materi- ally different compensation pack- ages," he said. Up until now, the interpreta- tion of the act was that pension plans and benefit plans were not included in the concept of wages, said Geneviève Beaudin, partner at Langlois Lawyers in Montreal. Employers could have a group of employees who did essentially the same task with a different pen- sion plan — and the distinction was the hiring date, she said. "e main principle is that you can have differences in treatment except for specific subjects. Since these pension benefits and other benefits employees had were not wages, the employer was able to make a distinction between its employees according to the hir- ing date," said Beaudin. But going forward, the gov- ernment would prohibit the distinction. "It's not an easy subject, so the legislature now is choosing to take a position in that debate, and I'm really not sure it's a good idea." For one, Quebec's Supplemen- tal Pension Plans Act already has this covered, she said, citing Section 34: "Unless another plan provid- ing similar benefits in which he is eligible for membership is estab- lished, an employee is entitled to become a member of a pension plan, on the same conditions as those applicable to other mem- bers, if his employment is similar or identical to that of members be- longing to the class of employees for whom the plan is established." ere is already an obligation for employers to ensure an em- ployee would be eligible for a pen- sion plan that would have similar benefits, said Beaudin. "I think this is enough — it's already there, and it's not really been challenged, what this provision means… I think it would be sufficient." New realities The new rules being proposed just don't make sense, according to Yves-omas Dorval, CEO of the Conseil du patronat du Qué- bec in Montreal — especially now that so many people don't stay with one employer for their entire career. "e reality today is employees will change at least every five years with employers, so the defined benefit (DB) plan, as an example, that was designed to fulfil the needs for the long-term employ- ees at the time; the new employees look more for flexibility," he said. "ey want to leave the com- pany to go to another employer with the investment that was made in their plan, and not im- pacted by the fact that they will not spend their whole life for only one employer." Today's employees are more knowledgeable about invest- ments, said Dorval, "and a lot of new employees want to man- age themselves the type of risk they want to afford with their investments for retirement, and not necessarily be linked with a group, with the demography of the group and investment policy of a specific plan." Younger members, for exam- ple, might be interested in riskier investments, he said. "ey want to manage more flexibility to address their specific needs and the level of risk they want to afford themselves." And now, the government wants to eliminate those differ- ences, said Dorval. "Most of the new plans are equivalent with the other plans, but they are different, that's why we call this… a differentiation treatment, it's not a disparity treatment." And looking long-term, it's not even an issue, he said. "Most of the people that were on the older plans will be retir- ing anyway, so why are we creat- ing the chaos if you can avoid it? ere is no chaos right now." Quebec's move to eliminate so-called disparities in pension plans will have unintended consequences, according to the Pension Investment Association of Canada. "In particular, we think that it will lead to an acceleration of the closing of DB pension plans and will hamper the ability of Quebec-based employers to offer and/or negotiate total compen- sation packages that are tailored to a changing workforce," said chair Brenda King in a letter to the province's Ministry of La- bour, Employment and Social Solidarity. If it becomes law, employers that are considering closing DB plans to new employees and mov- ing them into a new DC (defined contribution) arrangement will instead opt to move all employees into a DC plan, she said. "is will accelerate the decline of DB plan coverage in the Que- bec private sector and dispropor- tionately impact older employees with the most years of service un- der the DB plan." e association also believes the change doesn't appropriately consider other forms of compen- sation and benefits. e underlying premise of Bill 176 is the notion that DB plans are invariably superior to DC plans, said King. "DC features such as portabil- ity, flexibility and control are val- ued by many employees — in par- ticular younger employees — and it is not straightforward to place a value on these features relative to DB plan design features." Challenges for employers Employers require flexibil- ity to alter benefits and pensions throughout the years, and the needs of employees also change over time, said Beaudin. "A DC (pension) is not neces- sarily worse than a DB (pension), and it depends on a number of points," she said, citing as ex- amples the employer's level of contribution and the length of time an employee stays with an employer. For instance, if an employer is contributing five per cent to an employee's DC plan, and the worker stays there just two years, that's probably better than a DB plan which gains value over the long term. "It's difficult to say that a cer- tain DB is necessarily less ad- vantageous than a DC… because it depends on so many things," said Beaudin. It's not an easy task to measure the equivalence, and you have to take into consideration the overall remunerations or other options that are put in place, ac- cording to Dorval. Some companies, for example, offer employees stock options in- stead of pension plans, he said. "If you eliminate those differen- tiations for companies that want to maintain it… what you are do- ing, essentially, is you are saying that the company has to adopt only one plan for everybody that will not fulfil necessarily the needs for everyone. In the same time, you will create a huge risk of more labour conflict… if you are in an unionized organization." Quebec is already facing a tight labour market, so limiting em- ployers' flexibility does not help when it comes to recruitment and retention, said Dorval. "Employers have already a lot of pressure to offer different things to attract and retain employees, and if you eliminate the flexibil- ity that they have, you just create more difficulties for employers to find ways to accommodate differ- ent types of employees. is is not a good way to go." Making the transition There is one welcome part of the bill for employers, according to Beaudin. "Essentially, if you add a differ- ent regime according to the hir- ing date before the bill will come into force, you are OK… so this is a good thing because in pension plans and benefit plans, you don't have a simple reverse button." However, there are some peo- ple who don't agree with that tran- sitional provision and they want to have it abolished, she said. "ere will be certainly pres- sure from employers so that this provision stays, at least… I'm not sure it's even possible to go back in time. At present, the bill is just going forward." At least the government came up with this clause allowing em- ployers to maintain what they have already, said Dorval. "If you have differentiation in your plans already there, you can maintain it, but if you are coming with new plans, you have to adopt only one plan for everybody." The bill will not be retroac- tive, said Patrick Glaude, a lawyer at Gowling Lafleur Henderson in Montreal. "I know unions don't like that, but it's going to be impossible to re-open collective agreements across the province and say, 'As of today, it's applicable' — it would be a nightmare. But for the fu- ture, at least, this is what the leg- islature decided." ipm The Professional Trainer Full Accreditation Program on Mixed Media USB Flash Drive Institute of Professional Management 2210-1081 Ambleside Drive, Ottawa, ON, K2B 8C8 Tel: (613) 721-5957 Toll Free: 1-888-441-0000 This new mixed media package includes a text-based USB Flash Drive with participant workbook and exam. Works on Mac and PC. valid until July 10, 2018 Details at : www.workplace.ca/CanadianHR-Reporter.html The goal of this program is to teach participants how to assess the need for training, develop the material, prepare the handouts, deliver the content and evaluate the results. Successful completion of all 3 Modules makes you eligible for membership in the Canadian Professional Trainers Association, CPTA, with the RPT (Registered Professional Trainer) designation. $700 regular $845 ... save $145 Move could accelerate decline of DB plan coverage QUEBEC < pg. 1 "Most of the people that were on the older plans will be retiring anyway, so why are we creating the chaos if we can avoid it? ere is no chaos right now." Quebec is revamping its labour standards. Credit: REUTERS/Mathieu Belanger

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