January 15, 2009
Agreement reached with Unions on the CN Pension consent dispute

Last week, a breakthrough agreement was signed by CN and the CAW (National Council 4000 and Local 100, the IBEW (signals and
communication employees) and the TCRC (locomotive engineers, conductors, yard service employees and rail traffic controllers), with
the assistance of Mediator/Arbitrator Michel Picher.

In June 2006, Les Dakens, formerly of the Sr. Vice President of CN People, announced that everyone who left CN or was fired from
the Company before age 55 would be denied consent for unreduced early retirement benefits.  This meant that
they would lose up to
60% of their commuted value or deferred pension
.  At the same time, the fear arose that the overwhelming majority of unionized
employees at CN who leave between age 55 and 64 might suffer the same penalty at some future date.

More than two years of negotiations, mediation, and arbitration concerning this decision followed.  In 2007, the three Unions made
a public "final offer", which would have protected the age 55-64 group alone, but CN would not agree.

The start of arbitration hearings last May, and the involvement of the CAW’s legal counsel and of Arbitrator Picher, the Union’s
started to “break the ice.”  An agreement was finally reached last week, with an announcement and the highlights of the deal being
issued jointly by the three Unions.  

The highlights are as follows:

  • Any worker who in the future is unfortunately fired before age 55 (and who can reach 85 points before age 65) will be
    allowed to take their full pension or lump sum with no penalty, as before June 2006.  This includes over 40 fired members of
    the three unions whose dismissals are currently under grievance.  The same would apply to members who have a medically-
    certified terminal illness or condition.  A safeguard is included to ensure that otherwise model employees don't "get
    themselves fired" just to get a full lump sum pension.

  • If at any time in the future, CN tries to deny consent to one single worker aged 55 or more of any of the three unions –
    Arbitrator Picher will immediately resume the arbitration where the parties left off.

This agreement eliminates the fear for workers who are in their 40s and 50s of being fired and losing not only their job, but more
than half their pension for life and for the lifetime of their survivor.

At the same time, it provides a powerful assurance for workers aged 55 to 64 that their unreduced pensions are safe.  Why?  
Because the threat of re-starting the arbitration carries an enormous risk for CN.  If the arbitrator rules that CN can't deny consent,
this could incur extremely significant additional costs for CN and for the pension plan.  That's exactly what happened to another
Canadian railway a few years ago.

As for the Unions, they felt that there was always the possibility that they might lose at arbitration, and even if they won, the
lawyers say that the "win" would most likely only apply until the next round of bargaining, then they would be back to square one.  
That's why; in this case, the threat of arbitration is actually a better bet than the real thing.

This successful result came about through the patience and support of the members of the CAW, IBEW and TCRC at CN, and the
close working relationship and growing solidarity held between the three Unions.  All three Unions have pledged to continue and
intensify their joint efforts to ensure that their member’s pensions are protected in the future.

Click here to read the joint statement released by the three Unions