January 26, 2010

The Current Status of Mandatory Retirement in the Atlantic Provinces - A Range of Approaches

Related Services

Winter 2010

Federally Regulated Employers Section 15(1)(c) of the Canadian Human Rights Act (“CHRA”), which applies to federally regulated employees, provides that it is not a discriminatory practice to terminate an employee because of age if that individual has reached the normal age of retirement for employees working in [similar] positions.

Recently, a coalition of former pilots employed by Air Canada (whose collective agreement provided for mandatory retirement at age 60) challenged this provision. In August of 2009, the Canadian Human Rights Tribunal, in reversing an earlier decision, ruled that section 15(1)(c) of the CHRA, namely the allowance of mandatory retirement at the “normal age of retirement”, is an unjustified breach of the Charter of Rights and Freedoms. As a result, the Tribunal refused to give effect to the mandatory retirement of Air Canada’s pilots at age 60. Both the airline and the Air Canada Pilots Association have said that they will appeal the ruling: Vilven v. Air Canada [2009] C.H.R.D. No. 24 (“Vilven”).

As a result of this decision, current attempts to force the retirement of federally regulated employees simply as a result of the attainment of a particular age would likely be considered unconstitutional.

New Brunswick Employers

In New Brunswick, section 3(1) of the Human Rights Act (“NB HRA”) prohibits discrimination in respect of employment on the basis of age. However, section 3(6)(a) of the NB HRA provides a significant exemption in that the prohibition against discrimination on the basis of age does not apply to:

  • The termination of employment or a refusal to employ because of the terms or conditions of any bona fide retirement plan or pension plan;
  • The operation of the terms or conditions of any bona fide retirement plan or pension plan that have the effect of a minimum service requirement; or
  • The operation of terms or conditions of any bona fide group or employee insurance plan. [emphasis added]

However, it should be noted that the terms of the bona fide retirement or pension plan must be explicit. A New Brunswick Board of Inquiry has noted that merely having a pension plan that provides for mandatory retirement without penalty at age 65 does not thereby mean that the employer may terminate the employment of plan members “because of the terms or conditions” of the pension plan: Kuun v. University of New Brunswick [ 1983]N.B.H.R.B.I.D. No. 1.

Recently, in the New Brunswick (Human Rights Commission) v. Potash Corporation of Saskatchewan Inc., [2008] S.C.R. 604 case (“Potash”), the Supreme Court of Canada had occasion to consider what constitutes a “bona fide retirement or pension plan”. According to the Court, to meet the bona fide requirement in section 3(6)(a) of the NB HRA, a retirement or pension plan must be subjectively and objectively bona fide. More specifically, it must be:

  • a legitimate plan;
  • adopted in good faith; and
  • not for the purpose of defeating protected rights.

The inquiry is into the overall bona fides of the plan, not the actuarial details or mechanics of the terms and conditions of the plan. Thus, unless there is evidence that the retirement or pension plan as a whole is not legitimate, it will be protected by s.3(6)(a).

In summary, New Brunswick employers are free to force employees to retire at a particular age provided that decision is required by a bona fide retirement or pension plan.

Nova Scotia Employers On March 29, 2007 the Nova Scotia Government introduced Bill 163, “An Act Respecting the Elimination of Mandatory Retirement”. The Bill amended two Nova Scotia Statutes, the Human Rights Act and the Labour Standards Code, and had the effect of prohibiting mandatory retirement policies unless these policies were based on a “bona fide occupational requirement”.

The Nova Scotia Department of Labour and Workforce Development has defined a bona fide occupational requirement as an employment standard that makes distinctions on certain grounds, including age, but that is allowed under the Nova Scotia Human Rights Act because of the nature of the employment. The employer must establish:

  • that the employer adopted the requirement for a purpose rationally connected to the performance of the job;
  • that the employer adopted the requirement in an honest and good faith belief that it was necessary to the fulfillment of that legitimate work-related purpose; and
  • that the requirement is reasonably necessary to the accomplishment of that legitimate work-related purpose. It must be demonstrated that it is impossible to accommodate individual employees without imposing undue hardship on the employer.

As in New Brunswick, the Nova Scotia legislation included an exception to the prohibition against discrimination on the basis of age for the purposes of a pension plan; however the wording of this exception is somewhat different than in the New Brunswick legislation.

Under the Nova Scotia Human Rights Act, the protection from discrimination outlined in the Act cannot apply “to prevent, on account of age, the operation of a bona fide pension plan or the terms or conditions of a bona fide group or employee insurance plan”.

In Theriault v. Conseil scolaire acadien provincial(CSAP) a Human Rights Board of Inquiry considered this provision and found that a pension plan which does not require the retirement of a participant at any particular age did not act as a shield to a discrimination complaint. The complainant in this case was forced to retire at age 65, and the Board of Inquiry found that in order to fit under the pension plan exemption against a discrimination claim, evidence must be put forward to show that the respondent’s pension plan would be prevented from operating by decisions about when or why specific employees were to end their employment.

Employers seeking to fit under Nova Scotia’s pension exemption for mandatory retirement discrimination claims must therefore show that their pension plan would be prevented from operating if participants continued working past a defined retirement age.

Bill 163 came into effect on July 1, 2009. As of this date, employees who are forced to retire where this decision is not based on a “bona fide occupational requirement” or the “operation of a bona fide pension plan” or the “terms and conditions of a bona fide group or employee insurance plan” have the same recourse under the Human Rights Act as any other employee who has been discriminated against. Likewise, forced retirees may seek the remedies available under the Labour Standards Code for dismissal or suspension without just cause.

Newfoundland and Labrador Employers On May 26, 2007 the Newfoundland and Labrador Human Rights Code (the “NL Code”) was amended to prohibit employers from discriminating against employees who are aged 65 or older. The amendments effectively put an end to employer-imposed mandatory retirement at age 65. The prohibition is, of course, subject to an employer’s ability to establish that an age restriction is based on a “good faith” (i.e. bona fide) occupational qualification, which essentially means that an employer can discriminate if it can show, like Nova Scotia employers, that the rule on mandatory retirement is:

  • rationally connected to the performance of the job;
  • is adopted in an honest and good faith belief that it is necessary; and
  • that it is impossible to accommodate the employee without incurring undue hardship.

The prohibition against age discrimination is also subject to the exceptions in section 9(5) of the NL Code which states that the prohibition against age discrimination does not apply to prevent the operation of a “good faith retirement or pension plan” or a good faith employee insurance plan”. While it remains to be seen exactly how section 9(5) of the NL Code will be interpreted, some direction on the meaning of “good faith” can be taken from the Supreme Court of Canada’s 2008 decision in the Potash case referenced above. The decision in the Potash case, however, would likely have been different in Newfoundland and Labrador because of section 9(5.1) of the NL Code, which states that the “good faith retirement or pension plan” exception in section 9(5)(a) of the NL Code “does not apply to a provision of a good faith retirement or pension plan requiring a person to retire at an age set out in the plan”. This means that in Newfoundland and Labrador, an employer cannot force an employee to retire pursuant to a retirement of pension plan. Like Nova Scotia, forced retirement must therefore be based on a “bona fide occupational requirement”.

It is important to remember that the May 26, 2007 amendments to the NL Code have implications not only in relation to the issue of mandatory retirement, but also for other age-based discrimination issues. For example, since May 26, 2007, the NL Human Rights Commission has received numerous discrimination complaints arising from allegations that employees were denied job training opportunities and from individuals alleging that they were not offered employment because of their age. Only time will tell how human rights tribunals, arbitrators and the Courts will interpret and apply the provisions of the NL Code and deal with age discrimination and accommodation issues in the employment context.

Prince Edward Island Employers In Prince Edward Island, a person may not be discriminated against in his/her employment on the basis of his/her age
(s. 6(1) ).

Mandatory retirement may be permissible if the situation falls within the exception set forth in s. 11 of the Prince Edward Island Human Rights Act (“PEI HRA”), which provides:

11. The provisions of this Act relating to discrimination in relation to age or physical or intellectual disability do not affect the operation of any genuine retirement or pension plan or any genuine group or employee insurance plan. [emphasis added]

While this provision has not been interpreted by the PEI Human Rights Commission, there is a matter awaiting a decision of the Human Rights Commission, (Nilsson et al. v. University of Prince Edward Island et al. (“Nilsson”)) in which three University of Prince Edward Island employees have challenged a mandatory retirement provision contained in the UPEI pension plan which provides that all employees must retire by age 65. The issues in the case include whether the mandatory retirement age in the plan (which the parties have all admitted is a “genuine” plan) affects the “operation” of the plan, such that the s. 11 exception is operative in this instance. The case raises the question of whether the reasoning in the N.B. Potash case is applicable in PEI, given the unique wording of our section 11.

An Employer could also establish and enforce a mandatory retirement age in the workplace if the Employer can show that the mandatory retirement age is a genuine occupational requirement pursuant to s. 14 of the PEI HRA (a “BFOQ”). Again, there are currently no cases in PEI which have interpreted the “genuine occupational requirement” exception in the PEI HRA. The issue was argued in the Nilsson case, and in particular, whether establishing an age related BFOQ attracts a different (and lower) standard of proof than other forms of BFOQ’s. The Nilsson decision is expected to be issued not later than February, 2010.

Editor’s Note: Although the practice is still alive in the Maritimes, subject to differing provincial requirements outlined above, generally more and more provinces in Canada are moving away from the practice of mandatory retirement. The question also remains whether or not the recent federal decision in Vilven has opened the door to challenging similar legislation allowing for mandatory retirement on the basis of constitutionality.

Inquiries may be directed to:

New Brunswick - Trisha Gallant-LeBlanc at (506) 462-4764
Newfoundland & Labrador - Chris Peddigrew at (709) 570-5338
Nova Scotia -  Tom Groves at (902) 491-4104
Prince Edward Island - Karen Campbell, QC at (902) 629-3911 

Cox & Palmer publications are intended to provide information of a general nature only and not legal advice. The information presented is current to the date of publication and may be subject to change following the publication date.