Collective agreement overrides benefits exemption for over-65s

Employer argued benefits were exempt from mandatory retirement ban but collective agreement stipulated all employees should be included

An Ontario municipality shouldn’t have denied benefits to workers over 65 by relying on an exclusion of benefits in legislation banning mandatory retirement instead of its collective agreement, an arbitrator has ruled.

The City of London, Ont., had a collective agreement that was signed in May 2006 and was effective from Jan. 1, 2006, to Dec. 31, 2009. In the agreement, certain benefits were cut off when workers reached the age of 65, including dental coverage, eye exam coverage, group life insurance and accidental death and dismemberment insurance. The group life insurance policy was mandatory for all employees.

The pension plan between the city and the union stipulated employees were subject to retirement at age 65 but could be rehired without maintaining their seniority. Short-term disability (STD) and long-term disability (LTD) coverage were for “all permanent, non-probationary employees” and the agreement said LTD would not be provided after age 65.

On Dec. 12, 2006, Ontario amended its Human Rights Code, abolishing mandatory retirement at age 65. As a result, five city employees who were 65 continued working. However, the city cut off their benefits as stipulated by the benefits provisions in the collective agreement. It also cut off life insurance, as the policy said coverage would terminate on the earlier of the date of retirement or the day the employee turned 65. However, the employees were allowed to continue to collect and use sick leave credits, which weren’t specifically cut off in the collective agreement.

The union argued the five employees who stayed on continued to be employees under the main definition in the collective agreement and should still be entitled to benefits provided for in the agreement. The collective agreement could not be superseded by language in the insurance policies or the individual benefits and insurance coverage must comply with the collective agreement, not the other way around, said the union. The collective agreement did not put limits on coverage to employees under 65.

The union also said the city continued to provide certain benefits to the senior employees, such as sick leave and health insurance premiums. There was nothing in the collective agreement that specified some benefits but not others could be provided. In addition, the fact the life insurance policy was mandatory made it a condition of employment and suggested employees were covered as long as they were employees, said the union.

The city argued the human rights amendments exempted benefits, pension plans and insurance contracts with outside insurers from providing equal treatment to workers over the age of 65. It pointed to a document published by the Ontario Ministry of Labour before the amendments came into effect that said “the status quo with respect to disability plans, life insurance plans and health benefit plans are maintained” and insurance and benefits for workers over 65 would be at the employer’s discretion.

The city also said some of the policies of its insurance and benefits providers expressly terminated coverage at age 65, which was consistent with the collective agreement at the time it was agreed to. The union knew the amendments were coming later in the year but still accepted the age limitations, said the city. Though employees could now continue their employment under the new legislation, the city insisted its policies referring to termination of benefits at age 65 weren’t affected.

The arbitrator agreed with the union there was no justification to stop benefits that didn’t have specific limitations, such as STD coverage. As long as workers remained permanent employees under the collective agreement, they were entitled to benefits unless expressly excluded, said the arbitrator.

The arbitrator found the collective agreement’s requirement to provide benefits to all permanent employees didn’t allow the city to have insurance policies that didn’t do so, such as ones restricting coverage to those under 65. Though the legislative amendments made an exception in allowing employers to provide lesser benefits to workers over 65, it didn’t override the language in the collective agreement that gave benefits to all employees — which included those older than 65 after the amendments, said the arbitrator.

“The amendments to the Human Rights Code may enable employers and unions to make distinctions that disadvantage senior workers in their entitlement to benefits, but it does not mandate it or require us to read such a limitation into existing general contract language concerning benefits simply on the basis that workers who are 65 or older were not allowed to work past age 64 prior to Dec. 12, 2006,” said the arbitrator.

The arbitrator ruled the city violated the collective agreement by excluding employees aged 65 and over from benefits and insurance plans that were supposed to be available to all employees under the collective agreement. See London Civic Employees’ Local 107, Canadian Union of Public Employees vs. Corporation of the City of London (June 20, 2010), Brian Etherington — Arb. (Ont. Arb. Bd.).

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