OTTAWA—Nortel Networks Corp. did not give workers proper notice its intention to terminate its defined benefit pension plan and retiree health care benefits for certain employees, according to a lawsuit filed Tuesday.

The Toronto-based telecommunications company did not provide affected employees with reasonable notice of either the pension plan changes, as required under the Ontario Pensions Benefits Act, or the loss of retiree benefits, according to a lawsuit filed by plan members in the Ontario Superior Court of Justice in Ottawa. The lawsuit seeks class action status.

Before Jan. 1, 2008, Nortel employees could participate in a defined benefit pension plan that calculated benefits based on a formula involving years of service, age and earnings. In June 2006, though, the company announced it would close the plan to employees that don't meet certain criteria effective Jan. 1, 2008, at which time both contributions and benefit accruals would end.

The plan was replaced by a defined contribution plan to which the company automatically contributes 2% of eligible earnings, without taking into account salary increases beyond Jan. 1, 2008. Nortel also said it would provide a 50% match on employee contributions of up to 6% of eligible earnings, to an overall maximum of 5% employer contribution.

Members of the defined benefit plan were eligible to remain in the plan if they were at least 55 years old with 15 years of service, at least 60 years old regardless of service or had 30 years of service regardless of age. The plaintiffs in the potential class action did not meet the grandfathering criteria, according to the lawsuit.

Nortel estimated its pension plan expenses would be reduced by about $100 million a year beginning in 2008 and that the company's unfunded pension liability would fall by about $400 million.

The company also revised its retiree health care benefits to eliminate coverage for employees who were not at least 50 years old with five years of service on July 1, 2006.

The lawsuit seeks to void the pension changes because of the alleged failure to provide the legally required notice and a declaration that Nortel must take into account future salary increases when calculating pension benefits. Reasonable notice requirements in Canada vary depending on individual employee situations.

Alternatively, the lawsuit asks for damages arising from the failure to provide reasonable notice of termination of the defined benefit plan and retiree benefits, as well as special damages and legal costs.

"These changes to the pension program were designed to bring the company in line with many other comparable companies, while ensuring we still offer a competitive pension plan and overall benefits program," a Nortel spokesman said in a statement. "As we have just become aware of this action, we have no further comment at this time."