Mandatory Retirement: Not so Fast! - LawNow Magazine

Mandatory Retirement: Not so Fast!

Employment Law Column

“In cases where concern for the employee’s capacity is largely economic . . . it may be difficult, if not impossible, to demonstrate that mandatory retirement at a fixed age, without regard to individual capacity, may be validly imposed . . .”

Ontario Human Rights Commission v. Etobicoke, [1982] 1 SCR 202

Introduction

Generally, gone are the days when workers are forced to retire on their 65th birthdays.  If Canadian courts and human rights tribunals have not roundly declared that this constitutes illegal discrimination on the basis of age, most employers have simply rescinded their mandatory retirement policies for good business reasons.  They do not want to retire skilled and experienced workers, who can be hard to find or train.  They know older workers are competent and loyal.

Accordingly, mandatory retirement has moved from the norm to an exception in Canada. A mandatory retirement program based primarily on saving money (for example, related to productivity), will be much harder to justify than one based on public safety where evidence shows a palpable risk of harm from failure of older employees to adequately perform.  It is either prohibited entirely or permitted only if it is based on a bona fide occupational requirement (BFOR), or if accommodating an older worker is an undue hardship on the employer.

In this article, we explore when an employer can dismiss an employee, essentially on the basis of age.

Bona Fide Occupational Requirement

An exception to age discrimination is a situation where employers impose mandatory retirement under a “bona fide” retirement or pension plan.  Where there is evidence that age is a relevant criterion in the performance of an employee’s necessary duties, an otherwise age-based discriminatory rule may be excused under human rights equality legislation as a BFOR.

The test for a BFOR in the context of age discrimination was established in 1982 by the Supreme Court of Canada in Ontario v. Etobicoke.  In that case, the complainant was a firefighter who was required to retire at age 60.  The Court set out a two-part test to determine whether a mandatory retirement scheme is justifiable:

(1) Subjective component: the employer must establish that mandatory retirement was imposed honestly, in good faith, and in the belief that the limitation is in the interests of the adequate performance of the work, and not for ulterior or extraneous reasons aimed at objectives which could defeat the purpose of the [Human Rights] Code.

(2) Objective component: the employer must establish that the retirement plan is reasonably necessary to assure the efficient and economical performance of the job without endangering the employee, his fellow employees and the general public.

A mandatory retirement program based primarily on saving money (for example, related to productivity), will be much harder to justify than one based on public safety where evidence shows a palpable risk of harm from failure of older employees to adequately perform.

Ontario has enacted legislation mandating emergency firefighters to retire at age 60 unless a higher age is negotiated in a collective agreement.  This legislation precludes individual firefighters from challenging mandatory retirement on the ground that age is not a BFOR.

In late 2011, the federal Parliament amended the Canadian Human Rights Act.  Mandatory retirement policies are no longer allowed in federally-regulated workplaces.  However, there will be some cases where mandatory retirement based on age (or, put another way, “a younger person’s performance level”) will be determined to be a bona fide occupational requirement.  The BFOR defence exists in most human rights legislation across Canada and the Supreme Court of Canada has developed legal factors to apply it.

Undue Hardship

Employers must accommodate older employees up to the point of suffering undue hardship.  The hardship factors for employers include: costs, safety, employee morale, interference with other employees’ rights, and disruption of collective agreements.

Air Canada’s mandatory retirement policy for pilots was litigated for years in Kelly and Vilven v. Air Canada.  The case was heard three times by the Canadian Human Rights Tribunal and ruled on several times by the Federal Court.  Airline pilots were automatically retired when they turned 60, in accordance with provisions of the collective agreement between their union and Air Canada.  The airline argued that the standard in the industry was to retire pilots over 60 because they were ineligible for certain roles in the plane and this seriously hampered scheduling.

The Tribunal ultimately ruled in favour of Air Canada.  The mandatory retirement of pilots at age 60 balanced corporate and employee interests.  To abolish mandatory retirement of pilots would impose an undue hardship on Air Canada through increased operational costs, inefficiencies and challenges in scheduling pilots, as well as negative consequences for both the pilots’ pension plan and the collective bargaining agreement.

Conclusion

Age is never a factor at work until it is specifically a factor for a certain individual performing a certain job.  Although general mandatory retirement policies prima facie violate human rights legislation, the BFOR defence can still apply to permit age discrimination in employment as well as documented cases of undue hardship to accommodate a single older worker or a class of them.  The municipal firefighter and airline pilot cases described here showcase two examples of this.  Although these cases show how mandatory retirement can be used, it is still rather rare that an employer may legally retire an employee at a certain age.

Interestingly, these age-related rules equally apply where minimum ages for employment can be justified.

 

Authors:

Peter Bowal
Peter Bowal
Peter Bowal is a Professor of Law at the Haskayne School of Business, University of Calgary in Calgary, Alberta.
 

Logan Melville
Logan Melville recently graduated with a B.Comm. from the University of Calgary. (2015)
 


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