Restructuring Employee Benefits: Options and Restrictions


Financial pressures often prompt an employer to review the benefits provided to employees and former employees in order to determine whether changes can be made that would decrease the cost of those benefits. Other times an employer will make changes to the benefits it offers in order to attract new employees or to better respond to the demographics of its workforce. This paper explores some of the more common changes employers make in respect of the benefits they offer to active and retired employees and highlights the more significant restrictions on an employer’s ability to implement those changes.

This paper looks at the more significant benefits that flow from the employment relationship:

• benefits provided through a registered pension plan

• health benefits that are provided to active employees and their dependents; and

• health benefits that are provided to retired employees and their dependents.

An employer’s ability to make changes to the benefits described above will depend on the answers to the following questions:

• What is the benefit that is being changed?

• Has provision of the benefit been negotiated in a collective agreement?

• Are there statutory rules and restrictions that apply to the provision of the benefit?

• Does the individual have a vested or an accrued right to the benefit?

If you are a family law practitioner, these materials will give you some helpful information about how pension plans and health benefit plans are created and restructured. If your client or your client’s spouse participates in a pension or health benefit plan that undergoes restructuring, this paper is designed to help you identify how that restructuring can affect your client’s rights or obligations.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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