Why Ontario employers can’t dodge pension obligations

Many employers are resisting the ORPP as a “job-killing payroll tax.” Now one company wants to offload its share of the costs onto its workers.

Thestar.com
Nov. 30, 2015
By Martin Regg Cohn

What if the government mandated a new pension plan - with premiums split between employees and employers - but companies refused to bear their fair share?

That’s the challenge facing Premier Kathleen Wynne as she rolls out the long-promised Ontario Retirement Pension Plan - a central plank in her 2014 election victory.

To her credit, Wynne has followed through with detailed plans to phase in the ORPP starting in 2017.

To her dismay, some companies and lobby groups are fiercely resisting the plan, calling it a “job-killing payroll tax.”

But one company has gone beyond mere rhetoric, by proposing that it not pay up - or pony up - for the required cost-shared premiums for a group of nurses. As reported in Thursday’s column, CarePartners - a private for-profit community care operator that is heavily funded by the government - wanted its striking nurses in the Hamilton to Niagara region to absorb all costs for the proposed pension plan.

Here’s the wording of its proposal, first delivered during contract negotiations last September and submitted again before a scheduled hearing of the Ontario Labour Relations Board last week:

“The employer proposes that if the province’s implementation of ORPP results in the employer incurring increased pension costs for this bargaining unit ... the employer’s increased costs will be entirely offset through direct compensation savings in the collective agreement.”

Despite several requests last week, and again Monday, CarePartners did not respond to questions about its proposal that workers be responsible for bearing all ORPP costs. The company’s public relations representative, Bill Walker, also did not respond to requests for comment on how its ORPP stance dovetails with government legislation mandating that premiums be cost-shared - and that employers pick up all administrative costs, not fob them off on workers.

Smokey Thomas, head of the Ontario Public Service Employees Union, says the bitter seven-month strike was called off after all-day mediation Thursday at the OLRB, which sent the dispute to a combined mediation-arbitration process. But he notes that CarePartners still has not removed its hard-line pension proposal from the table.

“I’m still flabbergasted,” Thomas said, adding that his union believes the tactic is unprecedented in Ontario.

“Far as we know, this is the only company that’s ever tried it ... and I did ask around because I thought, ‘What the hell!’ ”

He frets that other companies might be emboldened by the attempt to offload pension premiums on their workers unless the government makes it clear that such language violates the letter and the spirit of ORPP legislation.

Dan Kelly, president of the Canadian Federation of Independent Business, says most of his members oppose the ORPP because they will face a cash squeeze. Since pensions are essentially a deferred form of compensation, it’s not illogical to dial down wages to make up the difference, he argues.

“There’s no free lunch here,” Kelly says.

But the CFIB leader hasn’t heard of any member companies proposing similar language to make workers bear the full burden of employers’ pension costs:

“I’ve not heard of anybody doing this explicitly. The idea of looking at the administration costs also seems a bit unusual - I’m not aware of anybody suggesting that that come out of employee wages.”

Under the Ontario pension plan, employees and employers cost-share the maximum 3.8 per cent of annual salary per worker, leaving each side responsible for paying its own 1.9 per cent portion. Administration costs are to be borne entirely by the employer.

Mitzie Hunter, the cabinet minister responsible for pension consultations, insists there should be no confusion for any company about the obligation to pay its share of ORPP premiums, just as they have with Canada Pension Plan premiums for half a century.

“We’ve been very consistent with the ORPP mirroring the CPP as closely as possible, ensuring that there’s an employer match,” she said in response to Thursday’s column.

“Retirement security is a shared responsibility, it’s not just solely an individual (responsibility). There is a responsibility for the employer and the individual, and we’ve affirmed that.”

But what if an employer persuades, cajoles or bargains its employees into signing a contract that gets workers to cover the company’s share of ORPP premiums and administration costs?

“Employers have an obligation. We will not allow them to contract out of that obligation,” Hunter replied. “That’s why it’s enshrined in our legislation that it’s a shared responsibility between the individuals and the employer, very much like the CPP is today.”

That’s a message the government needs to get out to employers. After winning a pension mandate from voters in the 2014 election, the Liberals still have unfinished business with the province’s business interests.