July 30, 2013

The High Cost of Age Discrimination

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Cowling v. Her Majesty the Queen in Right of Alberta, 2012 AHRC 12, offers an important lesson to employers: terminating an employee on the basis of age comes with a hefty price tag. In this case, the employee was not only reinstated, but was also awarded five years of past wages in addition to general damages of $15,000!

Facts

A 67-year-old Employee was terminated by the Province of Alberta when her most recent one-year contract was not renewed. The Employee had worked for the Province for eight years as a result of a number of successive contracts. Following the Employee’s non-renewal, the Province replaced the Employee’s contractual position with a lower level permanent position. The Employee applied for the permanent position but her application was denied on the basis that she was “unsuitable” for the position. None of the 110 applicants were successful. 

Shortly thereafter, the lower level position was upgraded to a management position, which was essentially the same position the employee had performed.

The Employee filed a human rights complaint alleging discrimination on the basis of her age.

Tribunal Decision

At the hearing, the Province argued that it needed to replace the Employee’s contractual position with a “growth position” and hire someone with more “development potential”. The Tribunal heard evidence on restructuring and succession planning that was ongoing in the Province. At paragraph 97, the Tribunal said:

The Human Resources Plan spoke of “leadership continuity,” “succession planning,” “development strategy,” successful recruitment,” “strong prospects for long term development,” and the “average age of staff is approximately 56 years old.” “Given the current demographics of the branch, a realistic succession plan includes bringing in a new professional employee at a Junior Level with significant opportunities to develop in the future.”

Despite the succession planning going on, the Province denied that age was a factor in the decision not to renew the Employee’s contract.

The Tribunal found the Province’s explanation unconvincing. It held that the Employee had established a prima facie case of age discrimination, which the Province failed to rebut.

The Employee was reinstated to her previous position on a one-year contract. The Tribunal took the unusual step of explicitly stating that, upon expiry of the contract, the Employee’s age “cannot be a factor in future decisions not to renew her contract.” The Province was also ordered to pay five years’ salary in addition to general damages in the amount of $15,000.

Application to New Brunswick

An aging workforce is a problem that is faced by many employers. However, succession plans that are designed to squeeze out older employees and replace them with younger ones violate human rights legislation. Like in Alberta, the New Brunswick Human Rights Act prohibits age discrimination in employment.

There are, however, exemptions under the New Brunswick Human Rights Act which, if met, exempt forced retirement from constituting age discrimination. The exemptions are:

  • a termination of employment or a refusal to employ because of the terms or conditions of any bona fide retirement plan or pension plan. A bona fide plan is one that is found to be legitimate, adopted in good faith, and not for the purpose of defeating protected rights; 
  • 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; 
  • The operation of terms or conditions of any bona fide group or employee insurance plan; or
  • A limitation, specification or preference on the basis of age is based on an occupational qualification. [emphasis added]

New Brunswick is the only province in Canada that permits mandatory retirement as a result of the terms or conditions of a bona fide retirement or pension plan. However, this exemption has not been constitutionally challenged in New Brunswick.


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.