OD FLASH | The individual continuation of long-term disability coverage at preferential rates, as provided for in a group insurance policy, and the resulting savings, do not constitute a retirement benefit

Court of Cassation, Labor Chamber, April 15, 2026 – Appeal No. 24-22.028 | Court of Cassation

In this case, an economic and social entity established, through a collective agreement and successive amendments, a specific coverage plan designed to provide long term disability coverage for all of its employees. This contractual arrangement was based on the employer’s subscription of a group insurance policy from an insurance provider. The contractual provisions of this policy provided former employees obtaining service of their legal pension benefits, with the option to maintain coverage on an individual basis, thereby allowing them to continue benefiting from the preferential rates initially negotiated for the company’s active employees.

After many years, the employer regularly terminated the collective agreement and its amendment before notifying the insurer of the termination of the group insurance policy. As a result of this termination, the insurer offered, to former employees (“retirees”) who wished to maintain their long-term disability coverage, new rate terms aligned with market prices, thereby eliminating the benefit of the reduced rates they had previously enjoyed. A group of retirees then filed a lawsuit against the employer in labor court, seeking a ruling that membership in the group policy under preferential terms constituted a retirement benefit linked to their former status as employees, the continuation of which should be guaranteed by the employer despite the termination of the agreements.

The Court of Appeals rejected all of the retirees’ claims, ruling that the employer was not obligated to maintain this benefit. The trial judges noted that the collective agreements explicitly applied only to active employees and that the commitment to maintain preferential rates after retirement was contractually the sole responsibility of the insurance provider. They thus held that the savings realized by retirees through the granting of preferential rates, without any payment from the employer, did not constitute an employer’s participation to the insurance contributions, once employees had left the company’s workforce, as retirees bore the cost of their individual coverage alone,

On appeal, the Court of Cassation upheld the appellate court’s ruling in a decision which clarified the concept of a retirement benefit. The High Court noted that such a benefit necessarily implies at least partial funding by the employer for the benefit of the former employee after the employee obtains service of his/her legal retirement pensions. In this case, the High Court observed that the company made no financial contribution to maintain the long-term disability coverage for retirees and that the retirees paid their contributions in full.

The Labor Chamber also emphasized that, according to the terms of the group insurance contract, the “long-term disability” coverage provided by the employer ceased upon retirement, and that retirees could choose to continue this coverage at their own expense, as individual policyholders, through a direct contractual relationship with the insurance provider. Since the employer had made no commitment to maintain or finance coverage for its former employees, the termination of the collective agreements and the termination of the group insurance contract were fully enforceable against them. Consequently, the continuation of coverage at preferential rates for retirees who chose to remain insured as individuals cannot constitute a legally protected retirement benefit.