Pension Plans & Mandatory Retirement

Human Rights Grounds: Pension Plans & Mandatory Retirement

Mandatory retirement has been eliminated in most jurisdictions in Canada, mainly by statutory reform and certain cases through the Charter of Rights and Freedoms. Ontario abolished mandatory retirement in 2005, by eliminating this as a statutory defence to claims of age discrimination. 1

The Supreme Court did rule on this issue in a 1990 case in which it concluded that the University’s mandatory retirement plan for faculty members did violate S. 15 values but allowed the policy to be maintained as a Section 1 saving provision which allows for a reasonable limit on equality rights. 2

Since this case, there has been some erosion in this ratio, however, a Federal Court of Appeal decision did affirm McKinney remained binding law. 3 The Federal Court decision involved a challenge brought by two pilots asserting that the Canadian Human Rights Act, which then allowed for mandatory retirement 4 alleging a Charter violation. The section iof the Canadian Human Rights Acr then read as follows:

  1. (1) It is not a discriminatory practice if…

(c) an individual’s employment is terminated because that individual has reached the normal age of retirement for employees working in positions similar to the position of that individual;

The court followed the McKinney decision and dismissed the claim.

The Federal Court from which the appeal was brought had decided in favour of the pilots for these reasons:

To recapitulate, the Federal Court gave four reasons for not following McKinney:

  1. The significant differences between the legislative provisions in issue;

  2. The clear indication in McKinney that the Supreme Court did not intend that the decision be the final word on the subject of mandatory retirement for all time;

  3. The differences in the evidentiary records that were before the Supreme Court and the Tribunal; and

  4. The developments in public policy that have occurred since McKinney was decided.

The Federal Court did decide against these submissions. It also offered this clarification of what McKinney did decide:

In my view, what McKinney did decide was that mandatory retirement, as an exception to the prohibition against discrimination on the basis of age, could be justified under section 1 of the Charter when it is a mutually advantageous arrangement between employers and employees which permits the workplace to be organized in a manner that accommodates the needs of both parties. While these types of arrangements are not limited to unionized workplaces, La Forest J. was very conscious of the significant role that collective bargaining plays in achieving these types of accommodations: see McKinney, cited above, at pages 312–314.

[81]      There is nothing in McKinney that would suggest that the analysis which resulted in the conclusion that paragraph 9(a) of the Code was saved under section 1 of the Charter does not apply to provisions permitting mandatory retirement prior to age 65.

It also added:

To recapitulate, I am of the view that McKinney decided that a provision which permits mandatory retirement is constitutionally permissible because the existence of a fixed and certain retirement date permits the negotiation of mutually beneficial arrangements which might not otherwise be possible. A provision such as paragraph 15(1)(c) of the CHRA permits such arrangements and would therefore come within the principles articulated in McKinney.

McKinney allowed for the principle that age discrimination is “different” from other forms of human rights protections, as everyone does age and further that there has been accepted a general correlation between advancing age and performance. There is also a propensity in the event of Charter or human rights challenges, to allow a degree of deference to the legislatures.

Many courts have suggested that it is time to review McKinney in view of changing societal values. The B.C. Court of Appeal noted: 5

In the event that McKinney is found to stand for the proposition that all mandatory retirement policies in the public sector which are not in contravention of provincial human rights legislation are, therefore, justified under s. 1 of the Charter, I would urge the Supreme Court of Canada to reconsider this issue. Eleven years have now passed since McKinney was decided. The demographics of the workplace have changed considerably, not only with respect to the university community, but also in the workplace at large. At least two other countries, Australia and New Zealand have abolished mandatory retirement. Recent studies have been done on the effect of abolishing mandatory retirement in Canada and elsewhere. (See, for example, The Report of the Canadian Human Rights Act Review Panel (Ottawa: Canadian Human Rights Act Review Panel, June 2000, and, Ontario Human Rights Commission, Time for Action: Advancing Human Rights for Older Ontarians (Toronto: Queen’s Printer for Ontario, 28 June 2001).) The extent to which mandatory retirement policies impact on other equality rights, and on the mobility of the workforce, have become prominent social issues. The social and legislative facts now available may well cast doubt on the extent to which the courts should defer to legislative decisions made over a decade ago. The issue is certainly one of national importance.

An Ontario decision considered the validity of a section of the Justices of the Peace Act, which mandated retirement at age 70. The court found this term contrary to S. 15 of the Charter and was not saved by S. 1. The Court read into this law a need to retire at age 75, which put this law on the same footing as the age of retirement for federally appointed judges. 6

Certain industries have traditionally used mandatory retirement plans at set ages, such as police and fire fighting which typically required retirement at age 60. The Supreme Court of Canada has no longer permitted such employers to argue presumed group characteristics which are associated with aging. Today, such an employer must demonstrate that an individualized testing process is impossible to administer.

The issue with respect to fire fighters was put to rest in Ontario by specific legislation which superseded the Human Rights Code, which allows for mandatory retirement, subject to the right of the employee to prove otherwise, by reasonable accommodation. 7

A “bona fide” pension plan which mandates retirement at a specific age is not considered adverse treatment due to age. This rule requires an underpinning of a legislative exception to age discrimination. The good faith requirement is one which is examined as to the overall goals and general terms of the plan, not its minutiae. 8 The discretion within the pension plan to allow an employee to continue beyond age 65 was not sufficient to attack the good faith of its creation.

An exception to age within the plan need not be reasonable to be in good faith. 9The subjective component of the plan is one which reveals “motives and intentions”. The objective aspect relates to its “legitimacy or genuineness”. These two co-exist. 10

Objective signs of the legitimacy of the plan include its registration under the relevant statute. It cannot be created to defeat a protected right, adopted honestly in good business judgement.

Most jurisdictions allow for an exception to such pension plans from the terms of the human rights statute. Yukon, Manitoba and Canada do not.

In fact, Manitoba’s law is much to the converse. Its pension statute forbids a pension plan to mandate retirement at any age whatsoever. 11.

The statutes of Newfoundland, P.E.I., Alberta, Nunavut, N.W.T., New Brunswick and Saskatchewan also allow for the existence of a “good faith retirement” 12 plan to allow for adverse treatment due to age.

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Footnotes

  1. Ending Mandatory Retirement Statute Law Amendment Act, bill 211
  2. McKinney
  3. Air Canada Pilots v Kelly
  4. since repealed
  5. GVRDEU v Greater Vancouver   
  6. Justices of the Peace v Ontario
  7. Fire Protection and Prevention Act, 1997, S.O. 1997, c. 4 (“FPPA”)
  8. SCC New Brunswick (HRC) v Potash Corp; Tri-County Regional School Board v NS HRC NSCA 
  9.   SCC New Brunswick (HRC) v Potash Corp
  10. SCC New Brunswick (HRC) v Potash Corp
  11. Manitoba Pension Benefits Act s. 21 (7.1)
  12. The vocabulary differs but the substantive intent is the same.