Amendments to <i>Human Rights Code</i> extend protection from age discrimination to those over 65
British Columbia has become the latest province to abolish mandatory retirement. Introduced in April 2007, the Human Rights Code (Mandatory Retirement Elimination) Amendment Act came into force in B.C. on Jan. 1, 2008. Mandatory retirement has now been banned in all jurisdictions in Canada except for Nova Scotia, which will be implementing a ban in 2009.
Effect of the act
It is a common misconception there used to be a law that forced all employees to retire at 65. However, except for the Public Service Act, this was not the case in British Columbia. “Mandatory retirement” refers to an employment policy or contractual term that requires an employee to cease working at a specified age — usually 65.
Previously, the Human Rights Code prohibited discrimination based on age, but defined age as “19 years or more and less than 65 years.” This allowed employers to force retirement at or after age 65. The new act amends the definition of age to “19 years or more,” extending protection to older workers and abolishing mandatory retirement. The act also repealed section 23 of the Public Service Act, which required public servants to retire at 65.
The act did not change the bona fide occupational requirement (BFOR) defence in the code, which means a mandatory retirement policy may continue to be enforceable as long as an employer can meet the BFOR test by demonstrating the policy:
•was adopted for a purpose rationally connected to the job performance job;
•was adopted in an honest and good faith belief that it was necessary to achieve the work-related purpose; and
•is reasonably necessary to accomplish that purpose. To be reasonably necessary, the employer must show it is not possible to accommodate employees without imposing undue hardship on the employer.
In general, courts have not been sympathetic to a universal policy requiring retirement at a specified age, except in some specific occupations. As such, most employers must now do individualized testing and accommodate each employee to the point of undue hardship.
Impact on Employers
During the transition period of the new legislation, employers raised many questions on the effect of the act, especially on their bottom line. At this point, not all answers are clear.
Pension and benefit plans. The purpose of pension, retirement and group insurance plans is to provide benefits based on a prohibited ground such as age. By definition, these plans are therefore discriminatory.
Prior to 2008, the code contained an exemption for these plans. The act strengthened this exemption and the code now exempts from discrimination “a bona fide retirement, superannuation or pension plan or a bona fide group or employee insurance plan, whether or not the plan is the subject of a contract of insurance between an insurer and an employee.”
Previous decisions from the Human Rights Tribunal have found that, to meet the new requirement, the employer must establish that:
•the plan was adopted honestly, in the interests of sound and accepted business practice, and not for the purpose of defeating human rights;
•the age-based distinction was based on sound and accepted insurance or pension practice; and
•there was no practical alternative to the age-based distinction, having regard to all of the facts.
As before, employers must ensure their pension and benefit plans are consistent with sound and accepted industry practice. However, what was once considered to be “sound and accepted practice” may change over time and employers should stay current in this area.
Benefits and contractual obligations. Employers should also consider whether they have a contractual obligation to provide benefits to older employees and whether their insurance plans provide sufficient coverage.
In determining whether employees over 65 have a contractual right to benefits, some may have a written contract that spells out the benefits to be provided. More commonly, the employer’s obligations will be determined from oral agreements, benefit plan documents and conduct of the parties.
Many insurers refuse coverage to employees over 65 or require a higher premium. If an employer has an obligation to provide coverage, but does not obtain insurance to cover that risk, it could be liable to pay the benefits directly. This can be avoided by negotiating a new employment contract or by securing additional insurance coverage.
Termination of older employees. Previously, if an employer had a mandatory retirement policy, there was no obligation to provide notice of dismissal at retirement age. Now, employers must comply with both contractual and common law obligations on dismissal, regardless of age.
With both age and years of service being key factors in determining what is “reasonable notice,” liability on terminating older employees could be significant, unless the employee’s contract limits the amount of notice.
It would be wise for employers to consider entering contracts with older employees to limit severance obligations. For existing employees, employers should obtain legal advice to ensure such contracts are enforceable.
Performance evaluation. Employers in B.C. cannot base a termination decision on the employee’s age. Rather, they must demonstrate work-related requirements to justify altered terms of work or termination. If an employer cannot point to evidence of a non-age-related reason, it may risk a human rights complaint.
To avoid a complaint, employers should set and maintain consistent policies that are applicable to all workers and keep detailed records of performance. Further, employees should be formally warned that termination may result if the required standards are not met.
Duty to accommodate. Some employers are familiar with the “duty to accommodate” on protected grounds such as physical and mental disability. Now the duty to accommodate based on age applies to all employees, including those over the age of 65.
Employers must accommodate based on age, for example, by avoiding decisions based on stereotypical assumptions. They will also likely see an increase in physical or mental disabilities concurrent with the aging process. In either case, an employer must accommodate the employee to the point of undue hardship.
Kirsten D. Hume is a lawyer practising employment law with Harris & Company in Vancouver. She can be reached at (604) 891-2220 or [email protected].
From the Archives
Legislative changes over the past few years have eliminated mandatory retirement across Canada.
In the Oct. 24, 2007, issue of Canadian Employment Law Today, Thierry Carrière discussed how employers can adapt to having older workers as a result of them being free to work past 65.
A Dec. 20, 2007, Canadian Employment Law Today online post looked at a case where a Nova Scotia teacher was awarded $12,000 when a school board attempted to force him to retire at 65 but failed to prove it was for a necessary business reason.
Effect of the act
It is a common misconception there used to be a law that forced all employees to retire at 65. However, except for the Public Service Act, this was not the case in British Columbia. “Mandatory retirement” refers to an employment policy or contractual term that requires an employee to cease working at a specified age — usually 65.
Previously, the Human Rights Code prohibited discrimination based on age, but defined age as “19 years or more and less than 65 years.” This allowed employers to force retirement at or after age 65. The new act amends the definition of age to “19 years or more,” extending protection to older workers and abolishing mandatory retirement. The act also repealed section 23 of the Public Service Act, which required public servants to retire at 65.
The act did not change the bona fide occupational requirement (BFOR) defence in the code, which means a mandatory retirement policy may continue to be enforceable as long as an employer can meet the BFOR test by demonstrating the policy:
•was adopted for a purpose rationally connected to the job performance job;
•was adopted in an honest and good faith belief that it was necessary to achieve the work-related purpose; and
•is reasonably necessary to accomplish that purpose. To be reasonably necessary, the employer must show it is not possible to accommodate employees without imposing undue hardship on the employer.
In general, courts have not been sympathetic to a universal policy requiring retirement at a specified age, except in some specific occupations. As such, most employers must now do individualized testing and accommodate each employee to the point of undue hardship.
Impact on Employers
During the transition period of the new legislation, employers raised many questions on the effect of the act, especially on their bottom line. At this point, not all answers are clear.
Pension and benefit plans. The purpose of pension, retirement and group insurance plans is to provide benefits based on a prohibited ground such as age. By definition, these plans are therefore discriminatory.
Prior to 2008, the code contained an exemption for these plans. The act strengthened this exemption and the code now exempts from discrimination “a bona fide retirement, superannuation or pension plan or a bona fide group or employee insurance plan, whether or not the plan is the subject of a contract of insurance between an insurer and an employee.”
Previous decisions from the Human Rights Tribunal have found that, to meet the new requirement, the employer must establish that:
•the plan was adopted honestly, in the interests of sound and accepted business practice, and not for the purpose of defeating human rights;
•the age-based distinction was based on sound and accepted insurance or pension practice; and
•there was no practical alternative to the age-based distinction, having regard to all of the facts.
As before, employers must ensure their pension and benefit plans are consistent with sound and accepted industry practice. However, what was once considered to be “sound and accepted practice” may change over time and employers should stay current in this area.
Benefits and contractual obligations. Employers should also consider whether they have a contractual obligation to provide benefits to older employees and whether their insurance plans provide sufficient coverage.
In determining whether employees over 65 have a contractual right to benefits, some may have a written contract that spells out the benefits to be provided. More commonly, the employer’s obligations will be determined from oral agreements, benefit plan documents and conduct of the parties.
Many insurers refuse coverage to employees over 65 or require a higher premium. If an employer has an obligation to provide coverage, but does not obtain insurance to cover that risk, it could be liable to pay the benefits directly. This can be avoided by negotiating a new employment contract or by securing additional insurance coverage.
Termination of older employees. Previously, if an employer had a mandatory retirement policy, there was no obligation to provide notice of dismissal at retirement age. Now, employers must comply with both contractual and common law obligations on dismissal, regardless of age.
With both age and years of service being key factors in determining what is “reasonable notice,” liability on terminating older employees could be significant, unless the employee’s contract limits the amount of notice.
It would be wise for employers to consider entering contracts with older employees to limit severance obligations. For existing employees, employers should obtain legal advice to ensure such contracts are enforceable.
Performance evaluation. Employers in B.C. cannot base a termination decision on the employee’s age. Rather, they must demonstrate work-related requirements to justify altered terms of work or termination. If an employer cannot point to evidence of a non-age-related reason, it may risk a human rights complaint.
To avoid a complaint, employers should set and maintain consistent policies that are applicable to all workers and keep detailed records of performance. Further, employees should be formally warned that termination may result if the required standards are not met.
Duty to accommodate. Some employers are familiar with the “duty to accommodate” on protected grounds such as physical and mental disability. Now the duty to accommodate based on age applies to all employees, including those over the age of 65.
Employers must accommodate based on age, for example, by avoiding decisions based on stereotypical assumptions. They will also likely see an increase in physical or mental disabilities concurrent with the aging process. In either case, an employer must accommodate the employee to the point of undue hardship.
Kirsten D. Hume is a lawyer practising employment law with Harris & Company in Vancouver. She can be reached at (604) 891-2220 or [email protected].
From the Archives
Legislative changes over the past few years have eliminated mandatory retirement across Canada.
In the Oct. 24, 2007, issue of Canadian Employment Law Today, Thierry Carrière discussed how employers can adapt to having older workers as a result of them being free to work past 65.
A Dec. 20, 2007, Canadian Employment Law Today online post looked at a case where a Nova Scotia teacher was awarded $12,000 when a school board attempted to force him to retire at 65 but failed to prove it was for a necessary business reason.
