Mandatory retirements under scrutiny

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|Canadian HR Reporter|Last Updated: 09/04/2003

Eleven years ago, the Supreme Court of Canada upheld the University of Guelph’s policy requiring employees to retire at age 65. (McKinney v. University of Guelph (1990), 76 D.L.R. (4th) 545 (S.C.C.)

The Supreme Court of Canada? That should be the final word on the matter, right? Not according to the British Columbia Court of Appeal. In a recent decision, that court narrowed the scope of the McKinney judgment. In fact, the court concluded that one employer’s mandatory retirement policy was unlawful: Greater Vancouver Regional District Employees’ Union v. Greater Vancouver Regional District, 2001 BCCA 435 (B.C.C.A.).

What’s more, the issue of mandatory retirement is being re-addressed in human rights forums across the country. For example, the Ontario Human Rights Commission has examined the human rights of older workers and recommended that protection against age discrimination be extended to people over age 65.

What does this mean for employers? Are mandatory retirement policies still valid?

Let’s consider this question by first looking at the recent B.C. judgment.

Age was only reason for termination

The British Columbia Human Rights Code defines “age” as between 19 and 65, so the Greater Vancouver Regional District’s (GVRC) policy mandating retirement once an employee turned 65 did not offend age discrimination provisions.

Ray Coutts worked for GVRC as a waste plant operator. However, when it came to the GVRC’s attention shortly after he was hired that Coutts was older than 65, his employment was terminated. His termination was grieved by the union pursuant to the collective agreement. The mandatory retirement policy was not part of the collective agreement, but GVRC had enforced retirement at 65 for the last 15 years as part of an unwritten policy.

GVRC agreed that Coutts was otherwise qualified for the position and the only grounds for termination was age.

Justify on own merits

The majority of the arbitration board hearing the grievance concluded that, as the GVRC was a government entity, the Charter of Rights and Freedoms imposed an obligation on it to justify its mandatory retirement policy independent of the Code.

The parties agreed that the policy contravened the equality provisions of the Charter (s. 15) and so could only be justified if it was a “reasonable limit prescribed by law” under s.1 of the Charter.

In other words, GVRC’s mandatory retirement policy could not be sanctioned simply because it complied with the Human Rights Code — it had to be justifiable on its own merits.

GVRC relied entirely on the McKinney decision and called no evidence. The arbitration board concluded that the policy had not been justified and allowed the union’s grievance.

McKinney’s scope narrowed

GVRC appealed the board’s decision to the B.C. Court of Appeal. In a 2-1 decision, the court dismissed the appeal. The court agreed that mandatory retirement policies of public bodies must be justified on their own merits, on a case-by-case basis.

The court distinguished the McKinney decision from the GVRC case by pointing out that the former dealt with the private sector, while GVRC was a public sector body whose policies amounted to law.

This distinction might suggest that mandatory retirement policies in the private sector are still permissible. However, the court narrowed the McKinney decision further by pointing out that the Supreme Court had referred to university and hospital communities as “unique.” The suggestion is that, unless the employer operates in one of these environments, the need for a mandatory retirement policy will have to be justified on its own merits.

Time to reconsider

But the court didn’t stop there. Madam Justice Prowse, who wrote the majority decision, argued that the time had come to rethink the policy of mandatory retirement in general. She said:

“I would urge the Supreme Court of Canada to reconsider this issue. Eleven years have now passed since McKinney was decided. The demographics of the workplace have changed considerably, not only with respect to the university community, but also in the workplace at large. At least two other countries, Australia and New Zealand have abolished mandatory retirement. Recent studies have been done on the effect of abolishing mandatory retirement in Canada and elsewhere… The extent to which mandatory retirement policies impact on other equality rights, and on the mobility of the workforce, have become prominent social issues. The social and legislative facts now available may well cast doubt on the extent to which courts should defer to legislative decisions made over a decade ago. The issue is certainly one of national importance.”

The “recent studies” to which Madam Justice Prowse referred were performed by the Canadian Human Rights Act Review Panel (www.chrareview.org) and the Ontario Human Rights Commission (www.ohrc.on.ca/english/consultations/age-consultation-report.shtml). Saskatchewan has also reviewed its own legislation and reached the same conclusion as Ontario: it recommended repealing the definition of age so that those over 65 would be protected from discrimination (www.gov.sk.ca/shrc/codereview). The federal review panel advocated removing blanket defences for mandatory retirement, though it thought the issue required further study.

End of retirement policies?

So what does all this attention on mandatory retirement policies mean for employers? Must all such policies go by the wayside now?

The bottom line is that, if you have a mandatory retirement policy, it may be time to reconsider.

There’s no need to rush into anything, however — no statutory amendment is going to outlaw mandatory retirement overnight. As far as case law goes, the GVRC case only applies in British Columbia and really only pertains to public sector employers. The final word from the Supreme Court of Canada is still pending.

That means employers have time to examine retirement policies. Even if the law does change, it won’t prohibit every policy that mandates retirement at a certain age. There may be jobs within your organization that require young workers. However, you will have to be prepared to justify any age discrimination as a bona fide occupational requirement.

Marcia McDougall is the editor of CHRR’s companion publication The Canadian Employer, which tracks employment law issues (for subscription information contact 1-800-387-5164).

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