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Quebec court rules against AbitibiBowater’s unilateral change to pensions

The Quebec Superior Court has ruled that insolvent AbitibiBowater Inc. must abide by its collective labour agreemen…

The Quebec Superior Court has ruled that insolvent AbitibiBowater Inc. must abide by its collective labour agreement and apply changes to its pension program that were to take effect on May 1.

Prior to seeking bankruptcy protection last month, the newsprint maker unilaterally rescinded pension benefit improvements that had been negotiated in an earlier collective agreement. According to the Globe and Mail, lawyers for Abitibi told the court the company could not cover the cost of about $68 million to pension fund payouts to allow for early retirement at 57 instead of 58 for some workers.

The Montreal Gazette reports that about 200 Abitibi workers had informed the company they wanted to take early retirement, as early as May 1, the court had heard. On April 27, their union was informed by an e-mail that the company was suspending the pension improvements and those workers had the option of returning to work.

“This ruling sends a clear message that collective agreements must be respected” during bankruptcy protection proceedings, Gaétan Ménard, an executive with the Communications, Energy and Paperworkers Union of Canada, told the Gazette.

The new provision was to come into effect May 1, 2009. It still must be approved by government pension agencies in Quebec and Ontario.

Highlighting Abitibi’s reach in Quebec, the judge overseeing the company’s restructuring had to excuse himself from this pension motion because his father is among the company’s pensioners.