Governance is not just for pension plans.
“Many people think of governance for pension plans and don’t think of it for benefits,” said Serafina Morgia, national practice leader for health and productivity with Buck Consultants, speaking at Benefits Canada’s Benefits & Pension Summit yesterday in Toronto.
But governance is important and necessary for benefits plans. “You [want to] create a formal structure and process that sets the tasks and duties that are important in creating a benefits plan,” Morgia said.
This is necessary simply because there are a number of benefits cases that consider different areas under human rights legislation, said Kathryn M. Bush, a partner with Blake, Cassels & Graydon LLP. For example, Canadian case law shows that employees have won grievances on a number of discriminatory issues: age, pregnancy, mental versus physical disabilities, active versus inactive employees, to name a few.
Bush pointed to the 2003 case of the United Food and Commercial Workers as an example of discrimination based on inactivity. Canada Safeway hoped to reduce its labour costs by offering senior employees a buyout, but 15 of those employees weren’t able to participate in the buyout because their disabilities prevented them from working during the buyout period. The employees filed complaints to the Alberta Human Rights and Citizenship Commission. The Court of Appeal found that although the employer acted in good faith, the discrimination could not be justified. In other words, an employer must consider inactive employees in the same way it considers active employees, said Bush.
So to avoid any kind of litigation, Morgia stressed the importance of creating a benefits plan governance structure. There are five key elements plan sponsors need to take into accounts to create it.
1.Administration Create a sound and prudent process to protect employees’ rights to coverage.
2. Documentation Ensure that the contract, booklets, claims payment system, etc. are consistent.
3. Financial management Consider if taxable benefits are being calculated correctly and on time, or if surpluses and deficits are being accounted for when setting premium rates, for example.
4. Communication Create a strategy and set a standard for disseminating information regularly to employees.
5. Legislation affecting benefits Understand and be familiar with the four main legislations: human rights, employment standards, privacy and income tax.
You have to be constantly vigilant with respect to discrimination issues, said Bush. “Ask yourself, Do I have a real basis that is not discriminatory for a difference in treatment?”
All the articles from the event can be found on our special section: 2014 Benefits & Pension Summit Coverage.