Ontario to scrap mandatory retirement

What are the repercussions of legislative changes for HR?
By Uyen Vu
|Canadian HR Reporter|Last Updated: 05/20/2003

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iting the goal of eliminating discrimination, the Ontario government is scrapping mandatory retirement and extending human rights protection for workers older than 65.

The move would put Ontario alongside Alberta, Manitoba, Quebec, New Brunswick, Prince Edward Island and the three territories.

Currently, the Ontario Human Rights Code does not extend protection from age-discrimination to those 65 or older, so there are no recourses for employees who are forced out the door by employers when they reach that age.

But two years ago, a report by the Ontario Human Rights Commission said mandatory retirement is discriminatory. In recommending the law be reviewed, the report cited such reasons as basic fairness, an aging population that stays active and healthy longer, as well as the labour shortages facing certain sectors.

But what are the repercussions of these legislative changes?

Dominic Scaffidi, senior manager of human resources at the high-tech firm Nortel, said he agrees with the changes on the principle of equal treatment. Scaffidi also hopes the removal of mandatory retirement policies will help “alleviate some of the pressure” posed by the aging population.

But he has some concerns about what the lack of such policies will mean for human resource management.

“If it doesn’t come to an end at 65 then when does it come to an end? Does it have to get so bad in terms of performance, for example?” wondered Scaffidi.

The possibility that employers might become more intolerant of a drop in work quality among workers still years away from retirement is one of the reasons many unions oppose the removal of mandatory retirement policies.

Louis Erlichman, research director at the International Association of Machinist and Aerospace Workers, said employers might “start doing stringent tests for employees even when they’re 50. They might feel, ‘Well, if someone’s performance is going to drop off, we’d better get a record of it, because if we don’t, he or she might hang in indefinitely.’ It could possibly lead to an employer forcing someone out earlier.”

Erlichman added that it’s a red herring to talk about scrapping mandatory retirement in order to give people the freedom of choice.

“The real freedom of choice is there when you have a retirement income. Only then do you have a choice.”

While noting that unions aren’t unanimous in endorsing mandatory retirement, he said many do worry that such a move would lead to a further erosion of pension regimes. “We may see the eligible age for pension pushed back from 65 to 70.”

But industrial relations professor Frank Reid said there’s no evidence these scenarios would play out. Reid, director of the Centre for Industrial Relations at the University of Toronto, said for the pension eligibility age to be pushed back it would require the removal of mandatory retirement in all the provinces, followed by the federal government’s changing of Canada Pension Plan rules. Governments simply don’t always act in such a concerted fashion, he added.

Reid has studied the impact on the labour force in jurisdictions that have banned mandatory retirement, including states in the United States and Australia.

The difference is barely discernable, he said.

“When legislation has changed, it has been a non-event. You can always identify a few cases, ‘Oh, so-and-so worked until he was 92,’ but those cases are rare.”

In fact, the median age of retirement, even in such jurisdictions, has continued to drop. The number of people who stay past 65 stay only for a few years, added Reid. “It’s unusual for people to stay five years or longer, even in universities, where the temptation to stay on is greater.”

As for the use of performance measurements, said Reid, organizations would have to apply it to all age groups, otherwise the practice would be discriminatory. The use of such competency tests across the board “might be a good human resource policy. But whether a company has a mandatory retirement policy in place shouldn’t be a factor in the decision to use performance measurement regimes,” he noted.

“That’s because the evidence doesn’t suggest that productivity would go down — the workers who stay on tend to be keeners, not deadwood. And because the number of people staying on is so small, it just doesn’t make much sense for an employer to do that,” said Reid.

While it may be the case that most employees are happy to stop working at 65 and most employers are happy to let them go, the problem of people staying on “can be important to individual workers and individual workplaces,” said Malcolm Hamilton, principal at Mercer Human Resource Consulting.

Without mandatory retirement provisions, employers might be worried about “whether they would have to prove that a worker can’t do the job in order to compel him or her leave the position. Nor do they want to have to pay severance every time they ask an older worker to leave,” he said.

Employers may institute performance review processes to ensure productivity, but even then, he added, “It’s really quite an ugly process trying to track the deteriorating performance of older people and trying to imagine where the cut-off is between acceptable and unacceptable. That’s just unpleasant for the older worker, unpleasant for the employer and unpleasant for the workplace.”

The way to avoid this “is the simple way,” said Hamilton.

“Make everybody work hard, have a healthy pension plan, and rely on the fact that people will be quite happy to retire at a reasonable age if you have a good pension plan. This seems to work at most workplaces.”

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