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Retirement incentives: Is a nudge too much?

Incentives encouraging older employees to retire aren’t discriminatory, pressuring employees to take them can be

By Jeffrey R. Smith

When is it time to kick back and say goodbye to the working life? The answer to that isn’t what it used to be.

The age of 65 used to be accepted as the age for most people to stop working and sail off into their golden years. Many employers — including governments — even had policies that stipulated employees had to stop working and begin receiving pensions at that age.

But no more. In an age where awareness of human rights and discrimination is increasing, age discrimination has become an issue. Mandatory retirement is history, and any employers who try to force employees to call it quits when they reach a certain age are guilty of discrimination based on age, a protected ground under human rights legislation.

However, retirement plans are still important for employees — they just get to decide when they want to retire, instead of at a standard age. So employers can still provide retirement plans and incentives for employees to retire, but they have to be careful not to push the matter.

Recently, an Ontario public service employee filed and won a human rights complaint against her employer after she felt pressured to accept an offer to retire with an unreduced pension at the age of 60, with the opportunity to work for another employer while still receiving the pension. The incentive itself was not considered discriminatory — and indeed would be attractive to many employees — but the way it was presented to the employee was, said the Ontario Human Rights Tribunal.

The employee’s supervisor met with her several times and said she would be “foolish” not to take advantage of the opportunity. The supervisor also made negative comments about employees in the department who were on secondment — of which the employee was one — and set up a teleconference call with two retired former co-workers to discuss the advantages of retirement. The employee felt she was being pressured into retiring because of her age and the tribunal agreed.

So retirement incentive plans can be a good way for employers to encourage older employees to move on — making way for fresh talent and solving potential problems of waning productivity — and can be a good way for employees late in their careers to find the right time to retire. But it is the employee’s decision, and it can be a fine line between recommending retirement incentives and what could be perceived as coercing employees into making that decision.

What is that line? How should employers approach the promotion of retirement incentives to older employees without risking an accusation of age discrimination? What happens if an older employee feels targeted by such incentives?

Jeffrey R. Smith is the editor of Canadian Employment Law Today.

© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.

Jeffrey R. Smith

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective.
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