Arbitrator Sides with CAW on Pensions for New Hires at Air Canada

September 23, 2011

(Toronto)  The CAW has won the right to maintain the defined benefit pension plan for new hires at Air Canada, an arbitration ruling released Friday says.

In the 62 page ruling, federal arbitrator Kevin Burkett rejected Air Canada’s demand to put new hires into a defined contribution pension plan with an inferior, more precarious benefit. Instead Burkett sided with the CAW’s proposal to maintain the defined benefit pension plan for new hires, along with a defined contribution portion to their pension.  The result will be a “hybrid” pension for future new hires at the airline, consisting of both defined benefit and defined contribution components. Current CAW members at Air Canada remain in the existing defined benefit plan.

“This is an extremely important ruling and demonstrates that no employer, regardless of how large or small, should believe they have the unmitigated right to destroy a worker’s retirement security,” said CAW President Ken Lewenza, after the ruling.

In the case, the union argued that the defined benefit pension plan was an efficient, effective and economically productive way of providing a pension benefit and that a complete shift to a defined contribution system would have a detrimental impact on future workers, and on the health of the existing defined benefit plan.  

The new hybrid DB/ DC plan will see new hires receive part of their benefit from the existing DB pension plan (under a reduced formula) and part from a DC plan, contributed to by both workers and the employer.

The issue of pensions for new hires was sent to a mediation and arbitration process after the union and Air Canada were unable to come to an agreement on the matter in June.  But Air Canada refused to engage meaningfully in the mediation phase of that process, and tabled a final offer for a 100 per cent defined contribution plan that was inferior to what it had offered during bargaining.  The CAW, following the failure of mediation, proposed the hybrid DB/ DC model which the arbitrator eventually accepted.

“Despite unprecedented government interference in our collective bargaining, the union was able to build a clear case for the need to continue the DB pension plan, for all members, regardless of their age or start date,” said Lewenza. “We ultimately won on the merit of our argument for fairness.”

“Air Canada’s proposal would have been a major step back for the membership. Instead, because of the union’s efforts, the defined benefit plan will be maintained for current and future members,” said Jamie Ross, CAW Local 2002 president.

CAW members went on strike for three days at Air Canada in mid June after negotiations broke down over demands for cuts to existing pensions, the elimination of defined benefit pensions for new hires, and other economic issues.  Just hours after the strike began, the federal government prepared legislation to force CAW members back to work. Before the legislation was debated, the CAW and Air Canada reached an agreement on June 16.  The government passed similar legislation forcibly ending the lockout at Canada Post shortly thereafter.

CAW Local 2002 represents 3,800 members at Air Canada, who work in customer service and sales in major airports and call centres.

To read the full ruling, please visit:

For more information, please contact CAW Communications Director Shannon Devine (cell) 416-302-1699 or Assistant to CAW National President Bob Chernecki (cell) 416-543-7084

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