What’s happening with mandatory retirement?
Background
With Canada’s aging population, the issues of mandatory retirement and age discrimination have become salient concerns in the Canadian workplace. On May 29, 2003, the former Ontario government, under Premier Ernie Eves, tabled Bill 68, the Mandatory Retirement Elimination Act. The bill expired with the election of a Liberal majority government. But new legislation will likely be introduced given the elimination of mandatory retirement was publicly endorsed as part of the Liberal’s election platform.
In addition the Ontario Human Rights Commission appears to be taking a more proactive role in ensuring a climate of understanding and respect for the dignity and worth of older persons. The commission’s unquestionable support for the elimination of mandatory retirement and its recent Policy on Discrimination Against Older Persons because of Age both demonstrate age discrimination will continue to be the topic of considerable debate.
Currently, for the purposes of complaints of age discrimination in employment, the legal definition of “age” under subsection 10(1) of the Ontario Human Rights Code is limited to people between the ages of 18 and 65. As in Bill 68, under new legislation, the definition of age will likely be substituted to eliminate the upper age restriction on the definition. If the new legislation is introduced to eliminate mandatory retirement, an employer will have to prove retirement at age 65 is a bona fide occupational requirement in order to maintain a mandatory retirement policy. In order to succeed the employer will have to demonstrate the employee cannot be accommodated without undue hardship on the employer.
The Human Rights Commission’s policy
Although the Ontario Human Rights Commission’s Policy on Discrimination Against Older Persons Because of Age is non-binding, it sets out the commission’s position on discrimination against older persons as it relates to the provisions of the code. With respect to employment the policy sets out five areas of importance: hiring; on-the-job; retirement; pensions, benefits and seniority; and accommodating the older worker.
1. Hiring
The code prohibits a job advertisement that directly or indirectly classifies or indicates qualifications by age [subsection 23(2)]. The policy provides a number of guidelines in avoiding allegations of age discrimination in hiring:
•Statements that directly or indirectly relate to age should be avoided in advertisements.
•Regarding the job application form, while a form may ask “Are you 18 years or older and less than 65 years of age?” it should not ask any other questions about or relating to age or date of birth. The form should not request copies of documents that indicate age.
•During an interview questions relating to age should only be asked if a code defence applies, such as where a special program is in place (section 14), employment is aimed specifically at persons 65 or over (section 15), the employer is a special interest organization serving a particular age group (section 18) or age is a bona fide requirement.
Where an applicant’s age or date of birth is relevant to company pension and benefit plans, the policy states this information be collected after making an offer of employment and that it should be kept confidential. Although demonstrating age was directly or indirectly a factor in a hiring decision could be challenging, the policy sets out the following considerations which may suggest that age was a factor:
•indicating qualifications at any stage of the recruitment process which can reasonably interpreted as a euphemism for age;
•commenting on the applicant’s appearance and/or health or suggesting that the applicant may not fit into a youthful work culture;
•evidence the employer considered age to be relevant when determining whether a person might adapt to certain job conditions;
•evidence the employer felt the person would be too costly to the organization because of his age;
•evidence of employment practices or a hiring pattern that suggest a preference for, or an institutional bias toward, younger workers; and
•evidence the applicant’s qualifications for the job were as good or better than those of the person hired, and the person hired was significantly younger than the applicant.
2. On-the-job
Unless it is a bona fide requirement, denying or restricting employment opportunities or treating a worker differently because of age is a violation of the code. The policy indicates that statistical evidence regarding systemic issues in the workplace could constitute circumstantial evidence from which it can be inferred that discrimination probably occurred in an individual case.
The commission’s position is that older workers tend to experience disproportionate displacement or disadvantage as a result of workplace reorganization and downsizing. Accordingly the policy sets out a number of factors to guide any consideration of whether age discrimination has occurred in a workplace reorganization or downsizing, such as comparison of the performance of those who were selected for termination versus those who remained with the organization.
3. Retirement
The policy notes early retirement packages are often offered as an incentive to promote voluntary exit from the workforce. When designed properly, early retirement schemes are appropriate and will not raise human rights concerns. If an employer has a non-discriminatory reason for terminating an older worker, and wishes to offer the option of early retirement, there is nothing to prevent the employer from doing so. But as early retirement schemes by definition target older workers, great care must be employed in using them as a means to achieve downsizing objectives.
In some situations using early retirement to encourage older workers to leave the organization can raise concerns from a human rights perspective. This will occur if there is direct or implicit pressure being applied to accept retirement. If the older worker does not accept retirement but is subsequently selected for termination, and the reason for selecting him termination is related to age, an organization may face a human rights complaint.
The fact a generous retirement package is offered does not, in the commission’s view, defeat a claim of age discrimination if the early retirement option was not truly voluntary.
4. Pensions, benefits and seniority
Issues associated with pensions and benefits are often complex, as they are governed by a complex statutory regime as well as actuarial factors. In addition to the ability to justify a pension regime as a bona fide requirement and the fact that some distinctions within pension and benefit plans may not be discriminatory within the meaning of human rights law, section 25 of the code contains specific rules for pension and benefit plans.
Regarding sick leave plans the policy notes that if the plan makes benefits available based on age, it could be found to be discriminatory. But reduced pension benefits for early retirees have been found not to be discriminatory where the actuarial present value of reduced pensions for early retirees is at least equal to the present value of the deferred pension for those who wait until the age of eligibility for full pensions.
5. Accommodating the older worker
The commission’s position is that an employer’s duty to accommodate on the basis of family status, martial status and same-sex partnership status extends to employees who have work-related absences due to family-related responsibilities. These obligations exist regardless of the age of the employee. But due to a relationship between age and disability, these needs may become more apparent as workers, and members of their family, age.
This in-depth look at mandatory retirement was provided by Eric M. Roher and Michelle S. Henry. Roher is a partner at Bordner Ladner Gervais’ Toronto office. He practices in the areas of labour relations and education law. Henry is an associate in the labour and employment law group at Borden Ladner Gervais’ Toronto office. For more information visit www.blgcanada.com.
With Canada’s aging population, the issues of mandatory retirement and age discrimination have become salient concerns in the Canadian workplace. On May 29, 2003, the former Ontario government, under Premier Ernie Eves, tabled Bill 68, the Mandatory Retirement Elimination Act. The bill expired with the election of a Liberal majority government. But new legislation will likely be introduced given the elimination of mandatory retirement was publicly endorsed as part of the Liberal’s election platform.
In addition the Ontario Human Rights Commission appears to be taking a more proactive role in ensuring a climate of understanding and respect for the dignity and worth of older persons. The commission’s unquestionable support for the elimination of mandatory retirement and its recent Policy on Discrimination Against Older Persons because of Age both demonstrate age discrimination will continue to be the topic of considerable debate.
Currently, for the purposes of complaints of age discrimination in employment, the legal definition of “age” under subsection 10(1) of the Ontario Human Rights Code is limited to people between the ages of 18 and 65. As in Bill 68, under new legislation, the definition of age will likely be substituted to eliminate the upper age restriction on the definition. If the new legislation is introduced to eliminate mandatory retirement, an employer will have to prove retirement at age 65 is a bona fide occupational requirement in order to maintain a mandatory retirement policy. In order to succeed the employer will have to demonstrate the employee cannot be accommodated without undue hardship on the employer.
The Human Rights Commission’s policy
Although the Ontario Human Rights Commission’s Policy on Discrimination Against Older Persons Because of Age is non-binding, it sets out the commission’s position on discrimination against older persons as it relates to the provisions of the code. With respect to employment the policy sets out five areas of importance: hiring; on-the-job; retirement; pensions, benefits and seniority; and accommodating the older worker.
1. Hiring
The code prohibits a job advertisement that directly or indirectly classifies or indicates qualifications by age [subsection 23(2)]. The policy provides a number of guidelines in avoiding allegations of age discrimination in hiring:
•Statements that directly or indirectly relate to age should be avoided in advertisements.
•Regarding the job application form, while a form may ask “Are you 18 years or older and less than 65 years of age?” it should not ask any other questions about or relating to age or date of birth. The form should not request copies of documents that indicate age.
•During an interview questions relating to age should only be asked if a code defence applies, such as where a special program is in place (section 14), employment is aimed specifically at persons 65 or over (section 15), the employer is a special interest organization serving a particular age group (section 18) or age is a bona fide requirement.
Where an applicant’s age or date of birth is relevant to company pension and benefit plans, the policy states this information be collected after making an offer of employment and that it should be kept confidential. Although demonstrating age was directly or indirectly a factor in a hiring decision could be challenging, the policy sets out the following considerations which may suggest that age was a factor:
•indicating qualifications at any stage of the recruitment process which can reasonably interpreted as a euphemism for age;
•commenting on the applicant’s appearance and/or health or suggesting that the applicant may not fit into a youthful work culture;
•evidence the employer considered age to be relevant when determining whether a person might adapt to certain job conditions;
•evidence the employer felt the person would be too costly to the organization because of his age;
•evidence of employment practices or a hiring pattern that suggest a preference for, or an institutional bias toward, younger workers; and
•evidence the applicant’s qualifications for the job were as good or better than those of the person hired, and the person hired was significantly younger than the applicant.
2. On-the-job
Unless it is a bona fide requirement, denying or restricting employment opportunities or treating a worker differently because of age is a violation of the code. The policy indicates that statistical evidence regarding systemic issues in the workplace could constitute circumstantial evidence from which it can be inferred that discrimination probably occurred in an individual case.
The commission’s position is that older workers tend to experience disproportionate displacement or disadvantage as a result of workplace reorganization and downsizing. Accordingly the policy sets out a number of factors to guide any consideration of whether age discrimination has occurred in a workplace reorganization or downsizing, such as comparison of the performance of those who were selected for termination versus those who remained with the organization.
3. Retirement
The policy notes early retirement packages are often offered as an incentive to promote voluntary exit from the workforce. When designed properly, early retirement schemes are appropriate and will not raise human rights concerns. If an employer has a non-discriminatory reason for terminating an older worker, and wishes to offer the option of early retirement, there is nothing to prevent the employer from doing so. But as early retirement schemes by definition target older workers, great care must be employed in using them as a means to achieve downsizing objectives.
In some situations using early retirement to encourage older workers to leave the organization can raise concerns from a human rights perspective. This will occur if there is direct or implicit pressure being applied to accept retirement. If the older worker does not accept retirement but is subsequently selected for termination, and the reason for selecting him termination is related to age, an organization may face a human rights complaint.
The fact a generous retirement package is offered does not, in the commission’s view, defeat a claim of age discrimination if the early retirement option was not truly voluntary.
4. Pensions, benefits and seniority
Issues associated with pensions and benefits are often complex, as they are governed by a complex statutory regime as well as actuarial factors. In addition to the ability to justify a pension regime as a bona fide requirement and the fact that some distinctions within pension and benefit plans may not be discriminatory within the meaning of human rights law, section 25 of the code contains specific rules for pension and benefit plans.
Regarding sick leave plans the policy notes that if the plan makes benefits available based on age, it could be found to be discriminatory. But reduced pension benefits for early retirees have been found not to be discriminatory where the actuarial present value of reduced pensions for early retirees is at least equal to the present value of the deferred pension for those who wait until the age of eligibility for full pensions.
5. Accommodating the older worker
The commission’s position is that an employer’s duty to accommodate on the basis of family status, martial status and same-sex partnership status extends to employees who have work-related absences due to family-related responsibilities. These obligations exist regardless of the age of the employee. But due to a relationship between age and disability, these needs may become more apparent as workers, and members of their family, age.
This in-depth look at mandatory retirement was provided by Eric M. Roher and Michelle S. Henry. Roher is a partner at Bordner Ladner Gervais’ Toronto office. He practices in the areas of labour relations and education law. Henry is an associate in the labour and employment law group at Borden Ladner Gervais’ Toronto office. For more information visit www.blgcanada.com.
| Practical considerations As mentioned above, whether the Ontario government will introduce new legislation to eliminate mandatory retirement remains unclear. That being said, employers should begin to consider the impact of such changes and plan accordingly. The impact on the termination of employees over 65 should be of great concern to employers. Performance concerns do not generally constitute sufficient grounds for termination. Accordingly, when terminating an employee without cause, employers will have to offer long-service employees a substantial severance package in order to avoid any potential human rights complaints or allegations of wrongful dismissal. The possible impact of such legislation on the cost of benefits should also be considered. While there are options open to employers, such as offering early retirement packages, employers should ensure the possible alternatives proposed to employees will not raise concerns from a human rights perspective. |
