G. James Fyshe

The union appealed from a Divisional Court decision quashing an arbitrator's ruling that he had jurisdiction to determine an employee's entitlement to long-term disability benefits as against an insurer.

The collective agreement required the employer only to maintain the group insurance policy in force and pay premiums, obligations the employer had admittedly fulfilled, and the policy was not incorporated into the collective agreement.

Applying correctness review and the essential character analysis under labour arbitration jurisprudence, the court held the dispute was between the employee and the insurer under the insurance policy, not a dispute arising from the interpretation, application, administration or violation of the collective agreement.

The arbitrator therefore lacked jurisdiction, and also lacked authority to add the insurer to the arbitration.

The appellant company closed its plant and terminated group insurance benefits for retired workers following the expiration of the collective agreement.

The union grieved the termination of benefits.

The company objected to the arbitrator's jurisdiction on the basis that the collective agreement had expired.

The arbitrator found the matter arbitrable.

The Supreme Court of Canada held that the arbitrator's decision on jurisdiction must be correct, applying a pragmatic and functional approach.

The Court further held that retirement benefits can vest and survive the expiration of a collective agreement, allowing the grievance to proceed.