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LEGAL REPORT/Labour & Employment The pension conundrum B.C. case highlights possible areas of concern for employers in dismissals without cause. W hen companies are looking to make acquisitions or sell off divisions these days, pension plans and employee benefits are often at the forefront of issues requiring special consideration by the number crunchers — especially in light of a case in British Columbia that saw two employees win a wrongful dismissal claim focused entirely on projected losses associated with their pensions. Kerfoot v. Weyerhaeuser Company Ltd. considered claims by two men that arose after they went to work for their new employer, Domtar Corp. In 2007, Weyerhaeuser sold a pulp mill to Domtar and virtually all the workers had their employment with Weyerhaeuser terminated, but were immediately rehired by Domtar in essentially the same positions and for the same wages. "The problem was that Weyerhaeuser didn't provide proper notice of termination of employment," explains Christopher Mayer, an associate with Blake Cassels & Graydon LLP. "They had provided notice of the transaction, however they had always described it as conditional." As a result of the sale, employees stopped participating in Weyerhaeuser's defined benefit pension plan, which retained their past service benefits, and were enrolled in a Domtar plan for future service only. The DB plan included an enhanced early retirement provision known as the "rule of 65 and 10" which provided employees with at least 10 years' continuous service and combined age/service of at least 65 with unreduced early retirement benefits. The employees were given two options regarding their Weyerhaeuser pension plan entitlements: Option A to leave their benefits in the accrued DB plan and have their pensions entitlements determined upon eventual termination or retirement from Domtar, or upon their election to commence once they attained at least age 55, even if their www.CANADIAN L a w ye r m a g . c o m F e b r uary 2013 43 Kim Rosen By Jennifer Brown