Court resolution against a company for the unilateral change in a pension plan

In re: "Murman Gabriel L. vs. IBM Argentina S.A. and other" (Labor Court of Appeals, Room VI, May 29, 2002; DT 2003-A, p. 69) the plaintiff sued his employer for damages allegedly suffered as a result of the unilateral change in the pension plan determined in 1994 and for not having received the benefits of the fund, even though the plaintiff met the corresponding requirements. Moreover, the plaintiff claims the indemnification of moral damage suffered.

The first instance judge rejected the legal claim outright, stating that by the time the plan was modified the plaintiff did not have an acquired right to the pension, but an expected right that might be revoked or modified by the grantor. Additionally, it was stated that the plaintiff did not considered himself to be dismissed when the modification took place and, therefore, he tacitly consented to the same. The first instance judge also considered that the plaintiff had not met the necessary requirements to access the plan.

The Court of Appeals revoked the finding on appeal and supported the case on the understanding that from the moment of entering employment (1969), plaintiff had acquired the right to enjoy the pension that the defendant had established since 1967 to assist staff employees after their retirement from the company. This right, as one of the essential components in the employment contract, cannot be revoked nor changed by unilateral decision of the employer.

Moreover, the Court of Appeals confirmed this reasoning observing that the defendant, at the time of setting up the pension plan, had not made any sort of reservation of the right to modify, suspend or cancel the pension plan, at its own convenience. This circumstance altered the plaintiff's right to enjoy the plan fully and in totality.

The Court of Appeals understood that the employer´s unilateral decision to modify or alter essential characteristics of the agreement, without the employee´s consent, constitutes an act of absolute nullity, and consequently, is not subject to any confirmation by the employee.

Additionally, the Court of Appeals understood that explicit acceptance of the new plan by the plaintiff in 1994 does not change the situation, in that latter consent of the worker, be it express or implied, does not have legal effects, considering that it is an act involving a forbidden resignation of rights because it would be affecting statutory rights.

Following this criteria, Room VI concluded that the unilateral modification performed by the company of essential terms and conditions of the contract, such as the right to enjoy in the future the pension plan effective until then, is null and void because the plaintiff was damaged to the benefit of the company. Consequently, the Court of Appeals regarded the modification as not having been made, and the prior labor conditions to be in force .

Additionally, the Court of Appeals issued an opinion regarding a statement made by the plaintiff in the agreement entered into as a result of the termination of the employment contract (1998). By virtue of this statement, the plaintiff held that he had no further claims to make against the defendant under any concept arising from the employment contract that both parties had entered into. In this respect, the Court of Appeals considered this waiver of rights as null and void in that it contradicts the imperative norms that guarantee the principle that the employees may not waive their rights.

In order to assess the patrimonial damage, the Court of Appeals used the necessary amount to obtain a life annuity from a retirement insurance company as a framework, the equivalent to the monthly benefit that would have corresponded according to the company’s pension plan.

We note that the Court of Appeals resolved to set off and deduct from the amount specified in the sentence, the amounts granted by the company in concept of retirement bonus. This bonus was established by an agreement executed by the parties when the labor relationship was terminated.

As to the moral damages related to the modification of the pension plan, the Court of Appeals resolved that this claim should not be supported because the plaintiff did not prove that his personality was affected in any way.