Question: I have been employed by the same company for 22yrs and am 63 yrs old. Health care benefits are provided by the company and reduced benefits were available if you are over 60 when you retire. It was announced recently that no benefits will be provided for people that retire after Dec 31/17. I was planning to work for a few more years. I do not have a formal contact. Is this legal?
Answer: This is most likely illegal. Retiree health care benefits, if offered by an employer, are extremely important to retirees and their families. They could be considered a fundamental part of your compensation package and a form of deferred compensation for contributions that you have made to the company over the course of your career (i.e. like a long-term incentive plan). Since the retiree benefits were available to you until now, when you are on the cusp of retirement, you reasonably expected that these benefits would be available on retirement and arguably planned your affairs taking these benefits into account.
As such, unless you signed an employment contract or the employer had a written policy that you knew about, which specifically and clearly provided that the company had a right to amend or cancel the retiree benefits at any time, the company cannot simply take away this benefit, without providing proper notice to you.
In this case, you did not have a written employment contract (and I assume there is no policy), so the employer could not have reserved the right to eliminate the retiree benefit plan at any time. This means that the only way the employer could take away the retiree benefits from you while you are still working is by giving you “reasonable notice” of the change. Here, the employer proposes to put the changes into effect within mere months – this is not proper notice. The employer should have given you 18-24 months of notice if it wanted to make a significant change to your contract. You, therefore, have grounds to challenge the elimination of the benefits in December 2017 and a potential claim for constructive dismissal.