MTS Allstream decision: the aftermath

Union scores victory over company use of pension surplus
By Danielle Harder
|hrreporter.com|Last Updated: 03/12/2010

A Manitoba union is claiming victory after winning a nearly 13-year battle with MTS Allstream Inc., but its celebration has been somewhat tempered.

In 1997, the former provincial Crown corporation was sold and privatized. Employees and retirees were assured by the province and MTS that their new pension plan benefits would “mirror” their old ones. The dispute revolved around a $43-million pension surplus that existed at the time of the sale.

According to Kris Saxberg, the lawyer representing one of the two unions involved, MTS used the surplus to take a contribution holiday for several years, rather than directing the money to enhancements to the pension plan.

“The fact that the surplus was used up to MTS’s benefit rather than being used to buy us benefits is what triggered the lawsuit,” he says.

Recently, a Winnipeg court ruled the company must make a payment to the fund for the full amount plus interest, dating back to 1997 ($100 million), making it one of the highest judgment amounts ever awarded in a Manitoba court.

“The unions had to bear down,” says Saxberg. “They really believed in it and invested in it heavily and it has produced a sizeable return. I think this is pretty much the most significant thing that the union will have accomplished for its members since its inception.”

Bob Linsdell, business manager with TEAM, the union that represents current workers and pensioners, says the case has had a “unifying effect” on members.

“It demonstrates the value of a union because without the union, this just wouldn’t have happened,” he says. “There wouldn’t have been a fight. The company would have done what they did and there would have been nobody with the finances to challenge them.”

However, Linsdell is reluctant to celebrate the victory since MTS plans to appeal the decision.

In a statement, Chris Peirce, chief operating officer of MTS Allstream Inc. said, “We continue to believe the company has complied with all of the requirements of the Pension Benefits Standards Act, as well as the provincial legislation that privatized MTS and led to the creation of the MTS Pension Plan.”

It could take more than a year for the appeal to be heard. Meanwhile, the union and MTS management start negotiations on a new contract in just a few weeks.

“We understand the need to manage the books. We’re not there to squeeze every last penny out of the company,” says Linsdell. “I’m sure that nobody here would want to squeeze the company to the point where we broke the company to get that money back. We’re not expecting a cheque for $100 million in the post any time soon.”

Linsdell says even if the appeal fails, the union and company still face the challenge of dividing the payment among thousands of members who all have a different stake in the lawsuit.

“The money was generated from contributions prior to privatization, yet the fight and the cost has come from the dues of members who weren’t with the company before privatization. They paid the legal costs,” he says. “My view would be fairness on all sides for those who contributed to the surplus and those who contributed to the expense of fighting the lawsuit. That’s something we need to work out.”

It will be up to all parties to work together to come up with a proposal for sharing the award.

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