Service and age requirements for voluntary retirement package left long-term employee out in the cold when plant closed down
The age requirements of a voluntary early retirement package offered to employees of a closing Ontario plant did not discriminate against an employee who wasn’t old enough to qualify for the package, the Ontario Human Rights Tribunal has ruled.
John Kovacs, 53, worked in Burlington, Ont. for Stelwire, a Hamilton-based manufacturer of steel wire products. Kovacs joined the company when he was 20 years old and by 2004 he had put in 27 years of service. However, that same year, Stelwire filed for bankruptcy protection and its two facilities were acquired by Arcelor Mittal, another steel producer based in Montreal.
Retirement package offered to employees over 52 with service requirements
As part of the transaction and as an attempt to reduce the costs of the bankrupt company, Arcelor reached an agreement with the union that the Burlington facility would be closed and the Burlington employees would be offered early retirement packages, enhanced severance packages or preferential hiring at Stelwire’s other facility.
The union originally wanted all employees over the age of 50 to be eligible for the early retirement package, but it soon became evident that would be too costly. As a result, the following requirements were established for eligibility for the retirement package:
•30 or more years of service
•Older than age 55 with 15 or more years of service
•At least 52 years of age but less than 55 years of age with 25 or more years of service.
Kovacs was not eligible for the early retirement package because he was 47 years old at the time with 27 years of service, which didn’t meet any of the requirements. Along with others who didn’t meet the requirements, he was given the choice of an enhanced severance package or being placed on a recall list for the other facility. Kovacs wanted the chance to remain employed and opted for the recall list. He also filed a human rights complaint, claiming Arcelor discriminated against him because of his age. He argued employees who had the same amount of service or less than him that were older were able to take the retirement package. He suggested a fairer approach would be to base eligibility on a combination of age and service that gave proper credit to younger employees with extensive service, such as adding up age and service.
Voluntary early retirement exempt from age protection under code
The tribunal noted that early retirement plans with eligibility requirements based on age were common in unionized workforces, particularly in circumstances where there is a major restructuring of a business and its workforce. In the circumstances of the closing of the Burlington Stelwire facility, a weighting of the early retirement package towards older employees was because those employees would likely find it harder to find alternative employment.
The tribunal pointed out that the Ontario Human Rights Code had an express provision recognizing that a differentiation between employees based on age in a voluntary early retirement program may not be discriminatory if it complies with the province’s employment standards legislation. Ontario’s Employment Standards Act, 2000, prohibits pension plans from discriminating based on age, but its regulations allow an exception to this prohibition: voluntary early retirement programs that establish normal pensionable dates or ages for voluntary retirees. Because of this exception, Arcelor’s early retirement plan did not violate the code and age, for the purposes of the retirement plan, was not a protected ground of discrimination.
The court also looked at whether there was discrimination based on Kovacs being a member of a historically disadvantaged group that was adversely affected by the age differentiation. However, the court could not find any evidence that Kovacs was part of such a group and therefore didn’t find any discrimination on that basis.
The tribunal also found Kovac’s suggestion of calculating a “70 factor” eligibility was not any less discriminatory, because there could still be employees with lengthy service who were relatively young like himself who wouldn’t qualify.
The tribunal dismissed the complaint.
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