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Suggestions on creating a binding employment contract • Is it legal to have a mandatory retirement policy?

Suggestions on creating a binding employment contract

Question:
Do you have some suggestions as to how I may best create a binding employment contract?

Answer: Employment contracts codify the essential terms and conditions of the employment relationship. Spelling out the rights and obligations of both the employer and the employee will reduce the likelihood of misunderstandings developing or disputes arising during the employment relationship or thereafter. It should be noted that not all employment engagements require a written employment contract. But having determined that a situation would best be served by a written contract, the following points should be kept in mind:

1. Ideally, the employment contract should be completed prior to the commencement of work in order for it to be enforceable. Doing so will minimize an employee’s chance of claiming a contract was entered into under duress or some unconscionable circumstance. If the contract is executed after employment has commenced, additional steps will have to be taken so the legal requirement of “consideration” is met.

2. The employment contract must adhere to the minimum standards contained in the employment standards legislation. If a conflict arises, and these standards have not been met, the offending provisions of the contract will be considered to be void and the employee’s rights will be determined by the relevant case law.

3. The terms of the employment contract should be reasonable and should reflect a balanced view of the interests of both parties. A manifestly one-sided arrangement will invite challenge to its enforcement and could lead to a successful argument being advanced that the agreement was the product of an inequality in bargaining power.

4. The employment contract should contain a provision that allows for periodical revision or review. The parties should expect that the employee’s duties and responsibilities will change over time and the contract should provide a means by which the salient aspects of the relationship can be modified.

5. The language of the contract should be clear and unambiguous. While this point applies to all agreements, this is especially important with respect to the employment contract where the employee may be asked to agree to terms that would otherwise be unobtainable in accordance with the relevant case law. Such provisions, therefore, must not be drafted so as to be open to challenges on the basis of uncertainty or ambiguity.

6. The employee must be provided with a sufficient amount of time to review the contract and should be given the opportunity to obtain independent legal advice should he so desire.



Is it legal to have a mandatory retirement policy?

Question:
Is it illegal to have a mandatory age of retirement policy in an organization? I would like your opinion on the constitutionality of the following article in a collective agreement between a municipality and a union: “All employees reaching normal retirement age of 65 shall be obliged to retire from the services of the employer.”

In order to answer your question it is necessary to determine whether this article violates the Ontario Human Rights Code and or the Charter of Rights and Freedoms.

Ontario Human Rights Code

Currently the code does not extend protection from age-discrimination in employment to those 65 or older. The code prohibits discrimination on the basis of age.

Age is defined as being between the ages of 18 and 65 years inclusive. But a report made by the Ontario Human Rights Commission suggested that mandatory retirement is discriminatory and recommended the law be reviewed.

This report led to the development of Bill 68, an act to amend the provisions of certain acts respecting the age of retirement. Under Bill 68, the definition of age under the code would be amended to being 18 years of age or older with no upper limit. While this bill was to become law in January 2005, it died when there was a change in the provincial government. It remains to be seen whether the new Liberal government will pursue a similar initiative. Therefore at present a provision requiring retirement at age 65 would not violate the code.

Charter of Rights and Freedoms

One must also consider the application of the charter to this situation since the article was entered into by a municipality exercising statutory powers of a public nature.

The Supreme Court of Canada has ruled, in a series of decisions, that while mandatory retirement policies do constitute age discrimination under section 15(1) (the right to equality), these policies can be justified under section one of the charter. The basis for the Supreme Court’s decision is that it is a bona fide occupational requirement.

In these particular cases the rationales mentioned included infusing new talent into the organizations, facilitating personnel administration and buttressing the deferred wages and compensation structure.

Although the Supreme Court has held mandatory retirement policies do not violate the charter, the British Columbia Court of Appeal confirmed in Greater Vancouver Regional District Employees’ Union v. Greater Vancouver, that once a mandatory retirement policy has been found to infringe equality rights, there is an onus on the government employer to justify its policy under section one of the charter.

In accordance with the above, a mandatory age requirement in a collective agreement with a government employer would violate equality rights under the charter, as it discriminates on the basis of age.

Nonetheless the article may be upheld if the municipal government can demonstrate the infringement is a reasonable limit that is demonstrably justified in a free and democratic society. It should not be assumed that all mandatory retirement policies which do not violate provincial human rights legislation will be justified under section one of the charter.

Peter Israel is the head of Goodman and Carr LLP’s Human Resource Management Group. He can be reached at (416) 595-2323 or [email protected].

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