Ontario employers can reduce benefits for older workers: Arbitrator

Provisions allowing for benefits-related age discrimination a 'reasonable limit' on charter rights
|hrreporter.com|Last Updated: 11/11/2010

An employer can reduce or eliminate employee benefits once an employee reaches age 65, an Ontario arbitrator has ruled.

The case, Ontario Nurses Association and Municipality of Chatham-Kent, questioned the constitutionality of provisions in Ontario's Human Rights Code and Employment Standards Act that allow employers to cut off or reduce benefits to employees once they reach age 65.

Arbitrator Etherington ruled that although the provisions violated the equality provisions of the Charter of Rights and Freedoms, they were a reasonable limit on those rights.

Ontario's Human Rights Code prohibits discrimination in employment on the basis of age. In 2006, the code was amended to remove the upper age limit of 65, so the protections of the code now extend to all employees aged 18 year or older. This change effectively ended mandatory retirement in Ontario.

However, the code was also amended to permit employers to differentiate on the basis of age in employee benefit plans as long as the plans complied with the Employment Standards Act, which only prohibits age discrimination for employees under age 65.

After the changes to the code, the Municipality of Chatham-Kent and the Ontario Nurses Association (ONA) negotiated a collective agreement that provided reduced benefits for employees aged 65 and older. Also, these employees no longer had long-term disability or accidental death and dismemberment coverage.

ONA subsequently challenged the collective agreement provisions regarding benefits for employees aged 65 and older, stating they were unlawful, and the constitutionality of the code provisions that allow for age discrimination with respect to benefits.

The provisions of the collective agreement and the code do violate section 15 of the Charter of Rights and Freedoms and constitute discrimination based on age, found arbitrator Etherington.

However, they constitute a reasonable limit on the equality rights of the charter, he found.

Although not a perfect solution, the government’s decision to allow employers and employees to retain their current benefit plans and to preserve their ability to negotiate plans best suited to their workplace was a reasonable approach to the impact that the elimination of mandatory retirement would otherwise have on a wide variety of benefit plans developed prior to the change, he found.

The legislation left “employers, employees and unions with the flexibility to negotiate whatever terms and conditions of employment they feel the market warrants or requires to meet their particular needs in terms of recruitment, retention or continued employment. It does not mandate lesser benefits or insurance plan coverage for senior workers but leaves it to the parties to bargain to arrive at the coverage that best meets their circumstances," he said.

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