New Quebec government to abolish pre-existing “orphan clauses”
The Quebec Minister of Labour, Employment and Social Solidarity has stated that the new Quebec government intends to force the elimination of “orphan clauses” (i.e. differences in treatment with respect to eligibility for pension plans or other employee benefits based solely on the date of hire) between current and new employees. The Minister also said that there will be an announcement in due course. On December 5, 2018, all deputies supported a motion in the Quebec National Assembly to completely eliminate all orphan clauses with respect to pension plans or other benefits.
Effective June 11, 2018, the former Quebec government barred the adoption of new orphan clauses, but orphan clauses that existed before June 11, 2018 can continue to apply. Refer to the July 2018 edition of News & Views for more details.
According to the announcement, the exemption for pre-existing orphan clauses will be abolished. Orphan clauses in collective agreements regarding pension plans and employee benefits would be eliminated at the time of renegotiating these agreements. The application of this prohibition to non-unionized environments is not clear.
This development would apply to all employee pension and benefit plans offered to Quebec employees, other than employees who are federally regulated.
If the Quebec government chooses to go ahead with this proposal, it could have a significant impact on employers with provincially regulated employees in Quebec who have closed their defined benefit pension plans or any other benefit program to new employees. Such employers would be faced with the choice of either reopening their plans to new employees, and likely to current employees who were excluded from such plans, or with ceasing to continue to offer legacy plans to their longerstanding employees.
The situation is still developing and is subject to actual legislation being drafted and introduced in the National Assembly. There is no timeline for a Bill, but it will likely not be introduced for at least several months. We will monitor this situation and continue to advise you of future developments.