The End of Mandatory Retirement in Ontario: What Will This Mean in Reality for the Workplace?

By Kate Hughes

On December 12, 2006, Bill 211 – the Ending Mandatory Retirement Statute Law Amendment Act, 2005 – will be implemented (1). The Act amends the Ontario Human Rights Code and a number of other statutes to prohibit mandatory retirement at age 65 (2). Mandatory retirement at age 65 has been recognized as age discrimination for some time, but amending the Human Rights Code to protect workers has been controversial. Some employers and unions felt that a clear date for retirement allowed workers to leave the workplace with dignity and allowed for renewal of the workforce by creating space for younger workers. The legislation has ended the debate.

Now that we are on the eve of Bill 211 being implemented it is time to look at what will change in workplaces, what won’t change and what may change as a result of this new legislation. While Bill 211 is a very brief and simple piece of legislation, it has a very wide range of implications in the workplace.

Prohibition against Mandatory Retirement applicable from December 12, 2006 onwards

While the Act was passed a year ago (it received Royal Assent on December 12, 2005) implementation of most provisions of the Act was delayed for a year to allowed workplaces time to change human resources, pension and other policies, bylaws, employment contracts and/or collective agreements to comply with the new law. The full Act will come in force on December 12, 2006 and will not be retroactive.

This means that existing mandatory retirement policies and practices will continue to be lawful until December 12, 2006. Employees (or “independent contractors” etc.) who are compelled to retire under workplace policies or agreements prior to December 12, 2006 will not be able to file complaints of age discrimination and employers will not be compelled to reinstate them. It is an arbitrary cut off which may adversely affect those who turned 65 before December 12, 2006 and who wish to remain working at that workplace but one that will be difficult to challenge if the employer will not agree to continue employment.

Overview of the Act

Despite common belief, there was no general law that prescribed mandatory retirement at age 65 prior to Bill 211. However, employers typically had mandatory retirement policies. These were lawful because the Human Rights Code only protected individuals from age-based workplace discrimination when they were between the ages of 18 and 64. The new Act changes the definition of age in the Human Rights Code. Age will now be defined as meaning “an age that is 18 years or more” and individuals in the workplace are protected from being terminated on the basis of their age.

As a result, workplace rules, practices, institutional bylaws and policies , pension and other benefit plans that make distinctions based on age (over age 18) may be subject to complaints of age discrimination under the Code. It will now be unlawful for employers to impose mandatory retirement at a designated age, with the exceptions as set out below.

Exceptions:

(a) Bona fide occupational requirements

Even after Bill 211 comes into effect, there will be some circumstances in which mandatory retirements will remain enforceable. Section 24(1)(b) of the Human Rights Code carves out an exception for unequal treatment where “ the discrimination in employment is for reasons of age ... if the age... of the applicant is a reasonable and bona fide qualification because of the nature of the employment”( called a “bona fide occupational requirement” or “BFOR”).

In order to show that a mandatory retirement policy is a reasonable and bona fide qualification under the Code, the employer has the onus to prove that the nature of the job generally required termination at age 65. Mandatory retirement policies are only likely to be upheld as a BFOR in contexts where the work is very physically demanding and/or involves matters of employee or public safety. For example, mandatory retirement policies have most frequently been upheld in relation to firefighters or pilots but these cases were generally decided before the Meiorin Supreme Court of Canada case which placed the onus squarely on the employer to prove a high standard regarding BFOR. Whatever employers use the BFOR (3) exception will have to be carefully monitored once the new law is implemented.

(b) Employment Standards Act

Bill 211 maintains the status quo under the Employment Standards Act, 2000 regulations which permit an employee benefit, pension, superannuation or group insurance plan or fund to make distinctions based on age where those distinctions are made on an actuarial basis. Bill 211 amends s. 25 of the Human Rights Code to provide as follows:

(2.1) The right under section 5 to equal treatment with respect to employment without discrimination because of age is not infringed by an employee benefit, pension, superannuation or group insurance plan or fund that complies with the Employment Standards Act, 2000 and the regulations thereunder.

(2.2) Subsection (2.1) applies whether or not a plan or fund is the subject of a contract of insurance between an insurer and an employer.

(2.3) For greater certainty, subsections (2) and (2.1) apply whether or not “age” ... in the Employment Standards Act, 2000 or the regulations under it have the same meaning as those terms have in this Act.

Please contact us if you have specific question regarding the impact of the Employment Standards Act in a particular circumstance.

(c) Workplace Safety and Insurance Act

Bill 211 also specifically exempts the Workplace Safety and Insurance Act, 1997, the regulations made under it and the decisions and policies made under the Act and regulations that require or authorize a distinction based on age from the application of s. 1 (right to equal treatment in respect of services) and s. 5 (equal treatment in employment) of the Human Rights Code.

Bill 211 enacts the following new provisions to the WSIA:

2.1 (1) A provision of this Act or the regulations under it, or a decision or policy made under this Act or the regulations under it, that requires or authorizes a distinction because of age applies despite sections 1 and 5 of the Human Rights Code.

(2) Subsection (1) applies with necessary modifications to any predecessor to this Act or the regulations under it, or any decision or policy made under such an Act or regulation.

(3) Subsection (1) and (2) apply even if the facts in respect of which the requirement or distinction is made occurred before the day on which this section comes into force.

These new provisions in the WSIA came into effect December 12, 2005, unlike the rest of the Act which had a year to be implemented. These amendments were introduced in order to ensure that the WSIA system was not changed. The status quo is maintained for WSIA claims.

There are three key age-based distinctions in the WSIA that are maintained.

1. Where a worker was less than age 63 at the time of injury, his or her loss of earnings benefits will cease at age 65.
2. Where a worker was age 63 or more at the time of injury, he or she will receive only two years of loss of earnings benefits.
3. An employer’s obligation to re-employ an injured worker ceases when the worker reaches age 65 (4).

It is clear that under this scheme, workers over the age of 65 are treated differently based on age. In the wake of Bill 211 this distinction could be vulnerable to challenge under the Canadian Charter of Rights and Freedoms as legislation that discriminates based on age. This is an area that we anticipate will be subject to challenge. Please contact us if this is an area of problem in your workplace.

Rationale for the Change: Age Discrimination

The Ontario government stated that the reason for the new legislation was to abolish age discrimination. The Ontario Human Rights Code (similar to a number of other provinces such as British Columbia but unlike provinces such as Manitoba or Quebec) did not protect individuals from age discrimination as it only provided protection to those “eighteen years or more and less than sixty-five years”. The Human Rights Commission however had recommended that this provision be amended for a number of years in its policy paper on age discrimination.

As well, for several decades, it has been legally established that mandatory retirement at age 65 is age discrimination. There have been a number of court and human rights challenges to widespread employer policies setting age 65 as the mandatory retirement age. The leading case is McKinney (5) where in 1990 the Supreme Court of Canada, dealing with university professors, held that the age 65 mandatory retirement was age discrimination as it violated the equality provisions in s. 15(1) of the Canadian Charter of Rights and Freedoms. The Supreme Court of Canada also said that the Ontario Human Rights Code violated s. 15 of the Charter to the extent that it failed to protect those employees above the age of 65. However the majority of the Court went on to say the violation that was “justifiable” in our society under s. 1 of the Charter, largely on the rationale that it allows for renewal of jobs for younger academics. In the 17 years since this case, there have been repeated court, arbitration and tribunal challenges to the Code’s restrictions on age discrimination, all largely unsuccessful in Ontario (6).

The new legislation now deems mandatory retirement at age 65 no longer justifiable in Ontario. The government’s consultation paper noted the impending skilled labour shortage, once the baby boomers retire, as a reason for legislating mandatory retirement policies and practices as unlawful. Specifically, the government’s consultation report highlighted the expected shortage of health professionals as an example of the need to abolish mandatory retirement.

Trends: Anticipated Impact on Workplaces

Statistically, most people in Ontario retire before age 65 and it is expected that this trend will continue. However, once this new Act comes into force, no one can be required to retire at age 65 (or any specific age); nor, of course, are they forced to continue working. All workers will now have the same human rights protections against age discrimination as their colleagues under the age of 65.

However workplaces are expected to change as a result of abolishing mandatory retirement, even if people do not all plan to continue working past 65 in large numbers. There are a number of potential areas of change and areas for review in each workplace:

(a) Collective Agreements and Workplace Policies

The most immediate task for unions (and employers) will be to review all the collective agreements, pension benefit documents and workplace policies and employer practices that make distinctions based on age to impose mandatory retirement or to impose other forms of differential treatment for older workers. Hopefully this has been done in the year since the Act was proclaimed but not implemented. The language in these documents or the practices will need to be revised where necessary to bring them into line with Bill 211.

We note that collective agreements are not grand-parented under Bill 211. This means that if they include provisions which discriminate based on age these provisions will need to revised by December 12, 2006 (or be rendered ineffective) even though the collective agreement is in mid-term.

(b) Termination and Evaluation of Older Workers

As a result of abolishing mandatory retirement, employers will only be able to terminate employees against their will for just cause rather than force termination through retirement. Many people believe that previously, rather than fire “unproductive” older workers or attempt to counsel them, employers simply waited for the employee to retire. While it is not known if this was actually the case in a widespread way, employers will now need proof of performance issues on an individualized basis to terminate, rather than relying on mandatory retirement.

This includes ensuring that older employees are not subject to discriminatory performance evaluations and assumptions that competence always deteriorates with age. It will be important to ensure that any performance concerns raised by employers are addressed in the same way as they would be for all other employees in terms of giving constructive feedback, a fair opportunity to improve, and access to training where necessary.

If age is a factor in an employee’s termination, it will be necessary to examine whether there is a taint of discrimination that could give rise to a grievance, a human rights complaint or a wrongful dismissal action, depending on the circumstances.

(c) Duty to Accommodate

Older employees have the same right to accommodation as younger employees; employers will be held to the same legal standard of accommodation to the point of undue hardship. There is not a reduced standard of accommodation for older workers. Any performance concerns which could relate to the aging process should, if necessary, be properly addressed through age - or disability-related accommodation.

With respect to older workers, the duty to accommodate may arise most frequently in relation to matters such as disability, family status (including the need to care for an elderly spouse or parent), or conditions relating to aging itself. The most common disabilities that develop with age are decreased mobility, decreased agility and hearing loss. Examples of some kinds of accommodation that may be needed may include:

• flex-time, reduced hours, job-sharing, part-time work and home based work;
• technological support in the workplace (i.e. mechanical devices to help lift, access to documents in large-print format, equipment that is easy to read or is not physically demanding);
• work environment with brighter lighting and acoustics to reduce loud noises;
• job re-design/re-distribution of some tasks to ensure older workers can remain productive;
• continued access to training, which may include access to training programmes that are tailored to suit older employees’ learning styles.

(d) Training and Promotion

Older workers should not be treated differently and disadvantageously in relation to matters such as job opportunities, transfers, promotions, access to training, evaluations or other conditions of work. This should be carefully monitored to ensure that workers are not “put out to pasture” due to assumptions of that age equals incompetence.

(e) Pension Plans

Bill 211 does not amend the Pension Benefits Act or make any changes with respect to employee pension plans. Instead, as set out earlier, by the terms of Bill 211, a pension plan can continue to make differentiations based on age where these distinctions comply with the Employment Standards Act, 2000 and its related Regulation on Benefit Plans (O. Reg. 286/01). Under the ESA regulations, where the distinctions are based on an actuarial basis, a pension plan can differentiate based on an employee’s age in order to identify a normal retirement age or early voluntary retirement age or date. Plans can also continue to make age-based distinctions where the differentiation is made on an actuarial basis because of an employee’s age and relates to the rates of contributions or voluntary additional contributions to a pension plan; the rates of contributions by an employer; or the benefits payable to employees.

While these kinds of age-based distinctions remain permissible, it is still important to closely review all your pension documents to determine whether any other age-based differentiations (i.e. age for eligibility to join the pension plan) may contravene Bill 211.

To maintain registration under the Income Tax Act, a employer pension plan must commence payment of pension benefits by the end of the calendar year in which a member reaches age 69. It will be necessary to review your pension documents closely to determine what options are available for employees who wish to continue working past age 69 and to determine whether it may be necessary to bargain alternate compensation for such employees in lieu of further pension contributions or further accrual of pension benefits.

The elimination of mandatory retirement does not affect employees’ entitlements under the Canada Pension Plan which is administered by the federal government. There are no changes to the age 65 threshold for entitlement under that legislation.

(f) Other Benefit Plans

Bill 211 expressly permits some distinctions based on age to continue in various employee benefits plans. The Employment Standards Act, 2000 and its regulations had previously permitted certain age-based distinctions and Bill 211 leaves this regime unchanged.

In addition, the new s. 25(2.3) of the Human Rights Code, clarifies that the age-based distinctions under the ESA are permissible whether or not the definition of “age” in the ESA or the regulations under it have the same meaning as under the Human Rights Code. In this respect, it is worth noting that the Benefit Plan regulation under the ESA defines age as “any age of 18 years or more and less than 65 year” so that differential treatment of workers aged 65 and older can continue.

Many health benefit plans, life insurance plans, short and long term disability plans assume retirement at age 65 and provide that benefits under the plans will cease when an employee reaches age 65. In enacting Bill 211, the government expressly indicated that its intention was to maintain this state of affairs. The Ministry of Labour in its documents on Bill 211 has stated that

“The status quo with respect to disability plans, life insurance plans, and health benefit plans would be maintained. The provision of benefits to workers aged 65 and older would continue to be at the employer’s discretion.”

After Bill 211, age-based distinctions remain permissible with respect to life insurance, LTD and STD plans. This does not mean, however, that such restrictions are mandated or beyond challenge.

In the absence of ESA regulations that permit differential health benefits based on age, once Bill 211 comes into effect, it could be argued that an employer’s refusal to continue health, dental or other benefits coverage to employees over age 65 would be prima facie discriminatory. This may be a matter for negotiations or litigation in the right case.

Conclusion

This overview of Bill 211: Ending Mandatory Retirement Statute Law Amendment Act, 2005 is not intended to give legal advice in particular circumstances. It is intended to highlight areas that the Act addresses generally and areas where we expect employees and unions will have to keep a close eye to see how the workplace is affected now that the Act is being brought into force.

If you have specific questions or issues please contact us for a more detailed analysis.

1. See http://www.e-laws.gov.on.ca/DBLaws/Source/Statutes/English/2005/S05029_e.htm
2. Prior to Bill 211 some legislation prescribed set retirement ages for discrete groups of workers – i.e. coroners, medical officers of health. These provisions have been repealed by Bill 211.
3. British Columbia (Public Service Employee Relations Commission) vs. BCGSEU (“Meiorin”) [1999] 3 S.C.R.
4. Under s. 41(7) of the Act, the obligation to re-employ lasts for up to two years from the date of injury, one year from when the worker is medically fit to perform the essential duties of his or her pre-injury employment, or until the worker reaches age 65, whichever is earliest.
5. McKinney v. University of Guelph (1990) 76 DLR (4th) 545 (SCC)
6. But see in BC - Greater Vancouver Regional District Employees Union vs. Greater Vancouver Regional District (2001) 206 DLR (4th) 220 (BCCA) upholding an arbitration decision saying age discrimination and mandatory was no longer justifiable.