Executive Summary: Key Legal and Evidentiary Issues

• Scope of a grievance arbitrator’s exclusive jurisdiction over pension-related disputes arising from a collective agreement between a municipal employer and a firefighters’ union
• Interpretation of clause 25.7 of the collective agreement and its interaction with pension plan provisions on “active membership” and contribution exemptions during periods of disability
• Characterisation of the municipal pension plan and related contribution obligations as a condition of employment expressly or implicitly tied to the collective agreement
• Reasonableness of the arbitrator’s conclusion that he lacked jurisdiction to decide whether the City must pay both its own and the exempt employee’s pension contributions during disability
• Adequacy and coherence of the arbitrator’s reasons in light of the Vavilov reasonableness framework and recent appellate guidance on arbitral competence over benefit plans
• Effect of the City’s failure to pay certain contributions and alleged errors in reporting disabled members on actuarial deficits shared between employer and employees under Quebec pension funding legislation

Facts of the case

The Association des pompiers et pompières de Gatineau (the firefighters’ union) and the City of Gatineau are parties to a collective agreement governing the firefighters’ employment conditions. As part of a renewal of the collective agreement, the parties modified the short-term disability (ICD) and long-term disability (ILD) benefits. Short-term disability benefits were reduced from 90% to 85% of salary and long-term disability benefits from 80% to 70%. In exchange, employees on ICD or ILD leave were exempted from paying their pension contributions while on disability. Clause 25.7 of the collective agreement provides that a disabled employee remains an active member of the City’s pension plan, continues to receive pension benefits as if still regularly employed, and is exempted from paying their own pension contributions during the disability period, while expressly stating that the employee is “exonéré du paiement de sa cotisation au régime de retraite.” The agreement also contains article 30, under which the City commits to maintain in force the pension plan’s provisions and to obtain the union’s agreement before making any changes to the plan.

The union later alleged that in or around 26 October 2018, a City representative informed its president that since the introduction of the disability-related contribution exemption, the City had not only failed to pay the employees’ contribution share for exempt disabled employees but, at some points, had not paid its own contributions for those employees either. The union claimed that this omission significantly impacted the pension plan’s actuarial deficit, which, following the 2014 Loi favorisant la santé financière et la pérennité des régimes de retraite, must be borne in significant part by employees (45% of past deficits and 50% of future deficits). It argued that the City’s practice was illegal, contrary to the collective agreement and pension plan rules, and had generated financial prejudice for members through increased deficit-sharing.

The grievances and issues raised

On 5 November 2018, the union filed a grievance seeking a declaration that the City’s decision not to pay the pension contributions for disabled employees was illegal and contrary to the collective agreement. The union sought orders requiring the City to pay both its employer contributions and the employees’ contributions for the relevant disability periods, recalculation of the actuarial deficits, and reimbursement to employees of amounts allegedly overpaid toward their share of the deficits, with interest and an additional indemnity.

During the arbitration hearings, which spanned seven days between 3 May 2021 and 23 January 2024, the union obtained new information from the City in November 2022 about the number of disabled employees between 2009 and 2017. It amended its grievance to reflect this data and to allege that the City had transmitted erroneous information to the plan actuary regarding the number of disabled members to be considered in actuarial valuations. The City opposed the amendment, arguing that any defect had been known to the union before 2018 and that the grievance was time-barred; it also maintained that the amendment fundamentally altered the nature of the dispute and introduced a new cause of action.

In substance, the core issue before the arbitrator was whether, when an employee on disability is exempted from paying his or her own pension contributions under clause 25.7, the City must assume and pay both its own contribution share and the employee’s share into the pension fund for the disability period. Related issues included whether the City had correctly reported disabled participants to the actuary, the impact of any contribution shortfalls on the plan’s actuarial deficit, and whether any resulting prejudice to employees should be compensated.

The arbitrator’s decision and reasoning

On 21 June 2024, the arbitrator dismissed the grievance. He accepted that the City had maintained the pension plan in force and paid its contributions as determined by the plan actuary. He also accepted that employees on disability had been exempted from paying their own contributions during their disability periods as provided by clause 25.7. From this, he concluded that the City had complied with its express obligations under the collective agreement.

The arbitrator emphasised that the pension plan was set out in a document distinct from the collective agreement and formalised by a municipal by-law. He highlighted plan provisions, including article 8.4, which confirms that participation in the pension plan is not discontinued when a participant becomes disabled and receives short- or long-term disability benefits from employer-sponsored plans. He noted that the plan’s administration rested with a joint pension committee and that the plan was subject to oversight by Retraite Québec.

In determining his jurisdiction, the arbitrator reasoned that his competence depended on whether the dispute was expressly or implicitly tied to the collective agreement. He recognised that pension plans are intimately linked to working conditions and can be subject to collective bargaining and arbitration, but he drew a distinction between: (1) disputes about obligations explicitly contained in the collective agreement; and (2) disputes essentially about the interpretation, financing, and administration of a separate pension plan document. In his view, where the collective agreement is “silent” or merely obliges the employer to maintain the plan and pay premiums, the arbitrator generally lacks jurisdiction over disputes that truly concern the plan itself, unless the dispute arises indirectly from the application of other collective agreement provisions or the plan is clearly incorporated into the agreement.

He interpreted article 30 of the collective agreement, which obliges the City to maintain the pension plan and not modify it without union consent, as the limit of his jurisdiction. He considered that this clause demonstrated the parties’ intention to confine the arbitrator’s authority to ensuring that the plan remained in place and unchanged without mutual agreement. He concluded that the union’s arguments about the City’s alleged failure to pay both contribution shares for disabled employees required him to delve into the pension plan’s internal rules, its financing, the decisions of the pension committee, and the actuary’s determinations, rather than the collective agreement itself. For that reason, he found that he had no jurisdiction to decide whether the City was obligated to pay the employees’ contribution share during disability, and he declined to rule on timeliness or the merits of the amended grievance. The result was dismissal of the grievance for lack of jurisdiction.

Judicial review and applicable standard

The union brought an application for judicial review (pourvoi en contrôle judiciaire) before the Superior Court of Quebec, alleging that the arbitrator’s award was unreasonable. It argued that the pension plan formed part of the working conditions governed by the collective agreement, that the arbitrator failed to consider key provisions of the agreement and the plan in assessing his jurisdiction, and that he improperly refused to address the amended grievance and related issues.

Both parties accepted that the standard of review was reasonableness. Applying the Supreme Court of Canada’s Vavilov framework and subsequent appellate case law, the Court reiterated that reasonableness review has two dimensions: first, the decision must be supported by an internally coherent and rational chain of reasoning; and second, it must be justified having regard to the legal and factual constraints bearing on the decision. Within that framework, the Court emphasised the broad, exclusive jurisdiction of grievance arbitrators over disputes that, in their essence, concern the interpretation, application, administration, or alleged breach of a collective agreement, including rights and obligations that are implicitly part of the agreement.

The Court drew on leading authorities such as Bisaillon v. Université Concordia, Regroupement des cols bleus retraités et préretraités de Montréal v. Ville de Montréal, and the more recent Air Canada v. Davies, which stress that a liberal, purposive approach should be taken when determining whether a dispute is “expressly or implicitly” linked to a collective agreement. It underlined that the collective agreement’s “implicit content” includes rights and obligations that naturally flow from its explicit terms, from the nature of the employment relationship, and from broader legal norms governing contractual performance and management powers. Where a collective agreement refers to or incorporates a pension plan, even indirectly, such references may be sufficient to ground arbitral jurisdiction over disputes concerning that plan.

Court’s analysis of arbitral jurisdiction

The Superior Court held that the arbitrator correctly identified the essence of the dispute as whether the City failed to pay to the pension plan the contributions of disabled employees who had been exempted from personally paying their contributions. However, it found that his subsequent jurisdictional analysis was unreasonable.

First, the Court reviewed the collective agreement’s express references to the pension plan. Article 30 obliges the City to maintain the pension plan’s provisions as agreed between the parties and confirms that any subsequent changes must be by mutual agreement. Clause 25.7, in turn, stipulates that an employee who becomes disabled under specified provisions remains an active member of the City’s pension plan, continues to receive pension benefits as if still regularly employed, and is exempted from paying his or her own contributions during the disability period.

Secondly, the Court noted how these collective agreement provisions dovetail with the pension plan text itself. The pension plan defines an “active participant” to include an employee who pays contributions or is exempted from doing so under a plan provision, and article 8.4 provides that pension plan participation does not cease when a participant becomes disabled and is receiving employer-sponsored short- or long-term disability benefits. Through this linkage, the Court concluded that the pension plan is clearly contemplated and regulated—at least in part—by the collective agreement, and that the exemption from employee contributions during disability is an explicit employment condition within the agreement.

In light of this, the Court held that the factual context of the dispute fell squarely within the collective agreement’s scope. The rights flowing from the pension plan and the parties’ contribution obligations, particularly around the exemption in case of disability, are components of the firefighters’ employment conditions. Interpreting the City’s obligations when employees are exempted from contributions under clause 25.7 thus necessarily falls within the arbitrator’s exclusive jurisdiction. The fact that the arbitrator must also examine and interpret certain provisions of the pension plan, to which the collective agreement refers, does not strip him of that jurisdiction.

The Court also highlighted prior authority establishing that even where a collective agreement does not reproduce pension plan terms verbatim, a stipulation that the employer will maintain a pension plan for a fixed duration or continue to offer such a plan is sufficient to give an arbitrator jurisdiction over disputes involving the interpretation or application of the plan. Against this jurisprudential backdrop, the arbitrator’s reliance on article 30 to narrow his jurisdiction was inconsistent with the liberal approach mandated by the case law.

Outcome of the judicial review

The Court concluded that by refusing to decide whether the City was obliged to pay the disabled employees’ pension contributions in addition to its own contribution, the arbitrator effectively declined to exercise his jurisdiction over a dispute squarely grounded in the collective agreement. This refusal meant he failed to address the principal question submitted to him, rendering his award unjustified in light of the governing legal and factual constraints and lacking in internally coherent reasoning. Consequently, the award did not meet the standard of reasonableness.

As a result, the Superior Court allowed the application for judicial review, annulled the arbitrator’s 21 June 2024 award, and declared that the grievance arbitrator has jurisdiction to decide both the original grievance (“Grief initial POM-18-06”) and the amended grievance (“Grief amendé POM-18-06”). The Court ordered that these grievances be remitted to the same arbitrator, Me Éric Lévesque, to be decided on their merits in light of the Court’s judgment. The Court further ordered that legal costs (“frais de justice”) be paid by the City of Gatineau as mise en cause. The union is therefore the successful party on judicial review, but the judgment does not specify the precise monetary amount of the costs, and it does not itself grant any quantified damages or pension-related monetary award; those questions remain to be determined in the renewed arbitration, and the total amount of any eventual monetary award cannot be determined from this decision.