Mandatory retirement

Question: We currently have a mandatory retirement policy requiring retirement at age 65, as is acceptable according to B.C. human rights legislation. We want to change this so it is not mandatory but rather subject to assessments the person is still capable of performing the job. But what happens if we want the person turning 65 to retire even though he is still physically or mentally capable? (For example, the individual is not a respected manager or the position is being phased out.) What are our obligations to this employee? Do we have to give him severance?

Answer: It would appear your desired goal is to have the ability to decide who should continue to work past the age of 65 regardless of the individual’s personal capabilities. The best way to achieve this result is to continue to have a mandatory retirement policy for employees who turn 65, but modify the policy to make extension of the individual’s employment beyond age 65 available at the absolute discretion of management. If you do not desire the continued employment of the individual he will simply retire in accordance with the policy and you will have no obligation to provide either statutory or common law notice or any severance payment. But if you wish to continue the employment beyond age 65 you can do so at your discretion by entering into a new employment agreement with the employee which can be negotiated and agreed upon at that time.

If you do make the modifications suggested above to your existing mandatory retirement policy you will have to provide proper and effective notice to employees in order to implement the policy. You may wish to contact a lawyer with respect to the appropriate amount of notice for implementing the new policy as well as the specific language which should be used in a mandatory retirement policy along the lines discussed above.

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

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