But Supreme Court ruling involving New Brunswick law has limited application
Despite the fact New Brunswick outlawed mandatory retirement in 1973, a recent Supreme Court of Canada decision upholds an exemption that allows employers to force employees out the door at age 65, much to the dismay of the province’s human rights commission.
“Mandatory retirement is clearly age discrimination. A person who wants to continue to work should be allowed to do so,” said Gordon Porter, chair of the New Brunswick Human Rights Commission. “It is a question of fairness and it makes economic sense.”
However, under New Brunswick’s Human Rights Act, mandatory retirement is allowed at age 65 when a bona fide retirement or pension plan requires it.
In 2004 Melrose Scott, a miner who worked for 20 years for the Potash Corporation of Saskatchewan in Sussex, N.B., was forced to retire at age 65 in compliance with the company’s pension plan.
He filed a complaint with the New Brunswick Human Rights Commission, which found Potash’s policy discriminated against employees on the basis of age. The ruling was overturned by the Court of Queen’s Bench. The reversal was upheld by the New Brunswick Court of Appeal.
The matter made it to the Supreme Court of Canada, where the question before the court was what constituted a “bona fide retirement or pension plan.”
Last month the justices ruled 4-3 that in order to be bona fide, a pension plan must be a “legitimate plan adopted in good faith and not for the purpose of defeating protected rights.”
Scott’s case will now go back to the human rights commission, which will have to use the Supreme Court’s ruling to guide its decision on whether or not Potash’s policy was discriminatory.
“Given the very, very limited definition that the court imposed, there’s no way really the commission can do anything but concede that Potash has the ability to require this particular employee, who had reached age 65, to retire,” said Evan Shapiro, a research lawyer at human resource consulting firm Hewitt in Toronto.
While some observers wanted the court to make a sweeping policy change, the court said it would be up to the government of New Brunswick to do away with the pension plan exception if it saw fit.
When the commission originally found Potash’s policy of mandatory retirement was discriminatory based on age, it recommended the exemption be removed from the Human Rights Act. The government introduced a bill to that effect it in 2005, but a provincial election killed the bill before it could become law.
In the past, a pension plan that forced employees to retire at age 65 was a financial benefit to employers, said Shapiro.
“The longer that an employee is working, the longer the employer is continuing to contribute to a pension plan,” he said.
In a defined contribution plan, especially, the employer’s obligation ends as soon as the employee retires.
The exemption to New Brunswick’s Human Rights Act is clear cut, said Mark Newton, an employment lawyer with Heenan Blaikie in Toronto. As such, he was surprised the case went all the way to the Supreme Court.
However, the legislation itself might have outlived its usefulness when most of the country, including the Maritimes, is facing labour shortages, said Newton.
“The legislation in New Brunswick really defies common sense,” he said. “You don’t encounter many employers who simply want to mandatorily retire people at age 65.”
He also warned that employers will have to look carefully at the wording in pension plans because plans that say employees “may retire” at 65 might not stand up to the bona fide test as well as plans that say employees “shall” or “must” retire at 65.
Chief Justice Beverley McLachlin, along with the other two dissenting justices, believe the majority ruling sets the bar too low for employers. They proposed a more stringent test that would require companies to show mandatory retirement policies are “reasonably necessary having regard to the operation and sustainability of the plan.”
Potash repealed its mandatory retirement policy when Saskatchewan banned the practice in 2007, but is pleased with the ruling, said Rhonda Speiss, the company’s manager of public relations.
“We’re happy with the Supreme Court’s determination. It really just confirms what we understood to be the proper interpretation of the legislation,” she said.
The ruling will have little impact beyond New Brunswick because only a few other provinces (British Columbia, Alberta, Prince Edward Island and Newfoundland and Labrador) have similar exceptions. But the decision follows a trend of employer-friendly rulings from the country’s top court, said Shapiro.
“There’s been a series (of rulings) dealing with employment-related matters and human-rights type issues as well, where the Supreme Court is definitely exhibiting what could be described as a pro-employer bias,” he said.
“Mandatory retirement is clearly age discrimination. A person who wants to continue to work should be allowed to do so,” said Gordon Porter, chair of the New Brunswick Human Rights Commission. “It is a question of fairness and it makes economic sense.”
However, under New Brunswick’s Human Rights Act, mandatory retirement is allowed at age 65 when a bona fide retirement or pension plan requires it.
In 2004 Melrose Scott, a miner who worked for 20 years for the Potash Corporation of Saskatchewan in Sussex, N.B., was forced to retire at age 65 in compliance with the company’s pension plan.
He filed a complaint with the New Brunswick Human Rights Commission, which found Potash’s policy discriminated against employees on the basis of age. The ruling was overturned by the Court of Queen’s Bench. The reversal was upheld by the New Brunswick Court of Appeal.
The matter made it to the Supreme Court of Canada, where the question before the court was what constituted a “bona fide retirement or pension plan.”
Last month the justices ruled 4-3 that in order to be bona fide, a pension plan must be a “legitimate plan adopted in good faith and not for the purpose of defeating protected rights.”
Scott’s case will now go back to the human rights commission, which will have to use the Supreme Court’s ruling to guide its decision on whether or not Potash’s policy was discriminatory.
“Given the very, very limited definition that the court imposed, there’s no way really the commission can do anything but concede that Potash has the ability to require this particular employee, who had reached age 65, to retire,” said Evan Shapiro, a research lawyer at human resource consulting firm Hewitt in Toronto.
While some observers wanted the court to make a sweeping policy change, the court said it would be up to the government of New Brunswick to do away with the pension plan exception if it saw fit.
When the commission originally found Potash’s policy of mandatory retirement was discriminatory based on age, it recommended the exemption be removed from the Human Rights Act. The government introduced a bill to that effect it in 2005, but a provincial election killed the bill before it could become law.
In the past, a pension plan that forced employees to retire at age 65 was a financial benefit to employers, said Shapiro.
“The longer that an employee is working, the longer the employer is continuing to contribute to a pension plan,” he said.
In a defined contribution plan, especially, the employer’s obligation ends as soon as the employee retires.
The exemption to New Brunswick’s Human Rights Act is clear cut, said Mark Newton, an employment lawyer with Heenan Blaikie in Toronto. As such, he was surprised the case went all the way to the Supreme Court.
However, the legislation itself might have outlived its usefulness when most of the country, including the Maritimes, is facing labour shortages, said Newton.
“The legislation in New Brunswick really defies common sense,” he said. “You don’t encounter many employers who simply want to mandatorily retire people at age 65.”
He also warned that employers will have to look carefully at the wording in pension plans because plans that say employees “may retire” at 65 might not stand up to the bona fide test as well as plans that say employees “shall” or “must” retire at 65.
Chief Justice Beverley McLachlin, along with the other two dissenting justices, believe the majority ruling sets the bar too low for employers. They proposed a more stringent test that would require companies to show mandatory retirement policies are “reasonably necessary having regard to the operation and sustainability of the plan.”
Potash repealed its mandatory retirement policy when Saskatchewan banned the practice in 2007, but is pleased with the ruling, said Rhonda Speiss, the company’s manager of public relations.
“We’re happy with the Supreme Court’s determination. It really just confirms what we understood to be the proper interpretation of the legislation,” she said.
The ruling will have little impact beyond New Brunswick because only a few other provinces (British Columbia, Alberta, Prince Edward Island and Newfoundland and Labrador) have similar exceptions. But the decision follows a trend of employer-friendly rulings from the country’s top court, said Shapiro.
“There’s been a series (of rulings) dealing with employment-related matters and human-rights type issues as well, where the Supreme Court is definitely exhibiting what could be described as a pro-employer bias,” he said.
