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Judicial Arbitration in Canada Controversial in Airport Case

Tuesday, October, 25, 2011

Judicial arbitration looks likely in a Canadian pension dispute involving the airline Air Canada and the autoworkers union, which represents employees who work at airport check-in counters as well as some who work in call centers.  At issue is the decision of an arbitration panel.  This decision supported the union's plan for a new type of pension system.  Air Canada has served notice that it will appeal this decision to the courts in an attempt to overrule it, even though arbitration decisions do not usually involve the court system, as they are non-judicial forms of dispute resolution.


Judicial Arbitration May Decide New Pension System's Future


The union had proposed a new pension system that would be a hybrid of what currently exists.  In the new system, the defined benefit pensions that employees traditionally received would be combined with a defined contribution plan.  Such plans are much less expensive for the company than are traditional pensions. 


Air Canada, in contrast, would prefer that new hires be routed entirely into a defined contribution plan, and have no access to the defined benefit plan at all.  This is generally regarded as a retirement scheme that works to the financial disadvantage of employees, although it is much less costly for employers.


Representatives of the workers are outraged by the decision to head to court for legal arbitration because reportedly, both sides had agreed that the decision of the arbitration panel would be final and binding.