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Dec 10, 2013

Holding fast to a retirement date

Once an agreement setting a retirement date is completed, both sides must consent to a change
    

By Jeffrey R. Smith

Timing is everything. That can apply to many things, including employment-related areas such as employment contracts, dismissal dates and retirement dates. Can these be flexible? Possibly, but they don’t necessarily have to be.

When it comes to an employee ending the employment relationship, whether through quitting or retiring, once an effective date is decided, that’s it. The employer can’t unilaterally change that date — though it’s possible it could ask the employee to stay home until that date while continuing to pay the employee. Likewise, the employee can only change the date with the employer’s consent. If anything comes up that causes the employee to change her mind on the timing, she’s out of luck unless the employer agrees to make the change.

Last year, a Weetabix employee in Ontario informed the company she would be retiring on a certain date. The company agreed and the date was confirmed. However, soon after the employee realized she would need some time off around her retirement date and requested some days off during her final week of work. The HR manager suggested that since the employee wanted time off during that week, the company would consent to moving the employee’s retirement date up a week. The employee agreed and the retirement date was officially changed.

While this was going on, negotiations were underway for a new collective agreement, including an exit package for retiring employees. The new exit package was agreed upon during the employee’s last week at work and was approved the day after she retired. The employee inquired if she was eligible and the company said no.

An arbitrator backed Weetabix and disagreed with the union’s claim it should have told her about the impending agreement. At the time, there was no indication of when it passed and, even though the employee would have been eligible with her original retirement date, it was her decision to change the date when the possibility was presented to her. Even though she missed the exit package by one day, she was held to the retirement date she agreed upon with the employer.

Was it unfair to keep the employee from taking advantage of the new exit package? It doesn’t really matter, because she had an agreement and was held to it. While it was an option for the employer to be flexible in granting the employee eligibility, there was nothing in the collective agreement or employment law compelling it to do so.

The employee’s retirement agreement, signed by the employee and the employer, was in force and both were held to it. Though the employee had changed her original date, there was no obligation by the employer to agree to change it again. It’s unfortunate for the employee that she missed out so closely on the new exit package, but the fact remains it still was in effect after her retirement. It didn’t really matter whether the exit agreement came into effect one day or months later: the retired employee was no longer an employee.

What should be the approach of an employer in such circumstances? Should a retiring employee be given some leeway in recognition of her service? Or is it better to stick to the letter of an agreement, even if it sheds the employer in a negative light?

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective. He can be reached at jeffrey.r.smith@thomsonreuters.com or visit www.employmentlawtoday.com for more information.

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