Retired GM employees launch class-action suit to recover slashed benefits

Restructuring in 2007 and 2009 cut benefits employees say were part of their employment contracts and earned during their careers
|employmentlawtoday.com|Last Updated: 05/12/2010

General Motors Canada (GM) may be facing a class-action lawsuit from retired employees over cuts to benefits the automaker has made over the past three years.

Joseph O’Neill worked for GM in Oshawa, Ont., for nearly 40 years before retiring in 2002. After retirement, he and other company retirees enjoyed post-retirement benefits such as full dental and orthodontic coverage, life insurance and partial coverage of prescription drugs. However, in 2007, as a part of restructuring to cut costs, GM reduced many post-retirement benefits and completely eliminated others. Another round of cost-cutting in 2009 also hit retiree benefits, leaving them without semi-private hospital coverage or life insurance as well as reduced dental and drug coverage.

O’Neill filed a lawsuit in the Ontario Superior Court on behalf of 3,500 other retirees. His statement of claim said the benefits GM promised him and other employees were “an integral and fundamental part” of their compensation and they earned those benefits while working as part of their employment contracts. When GM took those benefits away, it breached their contracts, he claims.

The statement of claim also says many retirees didn’t make other arrangements for insurance and medical coverage because they believed they would always have GM’s benefits. As a result, many have been left vulnerable by the company’s unilateral decision to reduce and eliminate various benefits.

"Retirees depend on the drug plans, extended health-care benefits and the life insurance that GM promised it would provide," said O'Neill in a statement .

"We can't go back and demand more money for the work we did over the course of our careers at GM. It isn't fair for GM to come along after the fact and take away the benefits that we have already earned."

O’Neill wants GM to resume the benefits it promised to give retirees while they were employed with the company.

GM declined to comment on the lawsuit. None of the allegations have been proven in court.

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