Judge: U.S. Steel Canada may pay bonuses, keep benefits suspended

U.S. Steel Canada may set aside money to retain "key employees," but does not have to reinstate benefits as the company's restructuring continues.

Judge orders steel company to contribute $2.7 million to a transition fund for retirees left without benefits

U.S. Steel Canada must contribute $2.7 million to a transition fund to help pay for urgent health care benefits for retired U.S. Steel Canada employees, a judge ordered Friday. (John Rieti/CBC)

Justice Herman Wilton-Siegel ordered Friday that U.S. Steel Canada may set aside $1.57 million for "key employee" retention bonuses, but that the company does not have to reinstate the retirement benefits for more than 20,000 retired workers. 

He did, however, order U.S. Steel Canada to follow through on its offer to contribute $2.7 million to a provincial transition fund meant to fill in some of the gaps left by the loss of benefits. 

The order is in line with the court-appointed monitor's opinion, submitted to court last week.

U.S. Steel Canada entered bankruptcy protection under the Companies' Creditors Arrangement Act in September 2014 and was granted permission to stop covering retiree benefits last October as a cash-conservation measure.

Union representatives were "outraged" Friday, saying the judge's order amounts to the company being allowed to steal money from retired workers.

Not what union wanted

Retired steelworkers and salaried employees had offered last Friday to stop opposing the retention bonuses as long as U.S. Steel Canada would reinstate full benefits until Dec. 30, 2016.

U.S. Steel Canada countered with an offer to contribute $2.7 million to the transition fund that has been set up to help retirees access prescriptions and other crucial benefits, if the steelworkers would approve the bonuses plan and drop their motion to fully reinstate the benefits.

Union presidents Bill Ferguson and Gary Howe, in front of a march in January 2016, represent thousands of active and retired steelworkers affected by the sale of the former Stelco plants in Lake Erie and Hamilton to U.S. Steel in 2007. (Kelly Bennett/CBC)

The province set aside $3 million initially, and added another $2.5 million recently, to help with some urgent cases, prescriptions and health needs.

The steelworkers say people are falling through the gaps in the coverage from that temporary fund. The monitor said that the offer of $2.7 million from U.S. Steel Canada could be applied toward filling those gaps.

Jeopardize the sale 

Advisors to U.S. Steel Canada had warned in court documents that reinstating the benefits right now could jeopardize the ongoing sale process. Though the company has posted positive income, U.S. Steel Canada's chief restructuring officer warned that was not something to count on going forward.

"This is not a trend and is certainly not enough to counter the losses from operations prior to that time," he wrote in an affidavit dated Aug. 11.

The bonuses fund is capped at $1.57 million. The benefits could cost the company more than $3 million a month. 

'The Trudeau government following the same unfortunate path'

In a letter sent this week, MPs Scott Duvall and David Christopherson called the federal trade minister to account for the Liberal government's absence from the U.S. Steel Canada issue.

Addressing Min. Navdeep Bains, Canada's minister of Innovation, Science and Economic Development, the Hamilton-area MPs for the NDP said the federal government was "missing in action" and that Hamiltonians felt they'd been "abandoned."

Hamilton Mountain MP Scott Duvall and Hamilton Centre MP David Christopherson called on federal Liberals to try to help pensioners and dig into the deals struck between U.S. Steel and the previous administration. (Samantha Craggs/CBC)

"To date, your government has not been tangibly involved in any way to help protect the jobs, benefits and pensions of current and former employees of USSC/Stelco, despite commitments previously made by your colleagues and the prime minister," they wrote.

"What was once a story of the Harper government refusing to hold a foreign multinational to account is now one of the Trudeau government following the same unfortunate path."

kelly.bennett@cbc.ca | @kellyrbennett