Canada: The Tension Between Collective Agreement Obligations And The Elimination Of Mandatory Retirement

Effective December 12, 2006, the Ontario Human Rights Code (the "Code") was amended to remove the protection for mandatory retirement at age 65 or greater that had previously been included in the Code. The amendments changed the definition of age in the Code so that, in general, discrimination against employees aged 65 or older in respect of employment is no longer permitted.

At the same time, the government added subsections 25(2.1) to (2.3) to the Code to create an exception to the new general prohibition on discrimination against those aged 65 and older. These subsections provide that the right to equal treatment without discrimination on the basis of age is not infringed by benefit, pension, superannuation or group insurance plans or funds that comply with the Employment Standards Act, 2000 and its regulations. The combined effect of all of these legislative provisions is that employee benefit and insurance plans that provide differential treatment for workers aged 65 and up are deemed not to violate the Code.

The termination of benefits at age 65 has been challenged in three recent arbitration cases by unions arguing that such termination resulted in a breach of the collective agreement because it prevented the employer from fulfilling its promise of providing benefits to all employees.

The first case in which this issue was considered is Re London (City) and C.U.P.E., Loc. 101 (PY-02-07).1 The issue before Arbitrator Brandt was whether an employee over the age of 65 who has not retired remained entitled to various benefits under the collective agreement and under the terms of various insurance plans purchased by the City of London (the City).

Arbitrator Brandt held that there was "no question" that the collective agreement conferred an entitlement to benefits to all those who were "employees" of the City and, since the grievors were both employees, they were prima facie entitled to those benefits. In his view, the issue was whether the City had purchased an insurance plan which provided the agreed-upon insured benefits to the grievors. In allowing the grievance, Arbitrator Brandt held the grievors could take advantage of a policy that did not reference age as a limiting factor.

In London (City) v C.U.P.E., London Civic Employees, Local 107 (Collective Agreement Grievance),2 the issue was once again whether the employer violated the collective agreement by failing to extend the full benefits provided for under the collective agreement to employees over the age of 65. The collective agreement was entered into in May 2006, and had a term of January 1, 2006 until December 31, 2009. Article 14 of the agreement dealt with employee benefits. Some of the benefits clearly provided for termination at age 65. However, others did not contain any language to indicate that coverage would cease upon reaching 65 years of age. Article 14.1 stated that all of the insurance mentioned in Article 14 shall be as more particularly described and set forth in the respective policy or policies of insurance. The relevant policies provided for termination or reduction of most benefits at age 65.

Arbitrator Etherington allowed the grievance. He agreed with the union's submissions that the plain ordinary meaning of the language used in collective agreement contemplated that benefits would be provided to all permanent employees without limitation due to age. While limitations based on age that were expressly included in the collective agreement should be upheld, there was nothing in the wording of the other benefit provisions that would justify continuing to provide some but not all of the benefits to workers who reach age 65.

In the 2009 decision of Re School District No. 59 (Peace River South) and B.C.G.E.U.,3 Abitrator John B. Hall considered the cessation of benefits for employees over the age of 65 who continued to work after mandatory retirement was eliminated in British Columbia (as of January 1, 2008).

Arbitrator Hall found the employer's arguments persuasive, and denied the grievance. He distinguished City of London from the case before him on the basis that the actual terms of the insurance coverage had been agreed-upon by the parties. He determined that the parties' mutual intention was to provide benefit coverage pursuant to the negotiated insurance plan envisaged by the collective agreement. As the agreed-upon plan included age restrictions, the grievance was dismissed.

The existing case law on this issue suggests that there are two important factors to be considered in determining whether a provision in an insurance policy terminating benefits at age 65 violates the terms of a collective agreement. First, is the wording of the collective agreement and second, is the extent to which the specific terms of the insurance policies were negotiated by the parties. While the two Ontario decisions were not favourable to the employer, the decision Peace River South should not be ignored.

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1 (2008) 169 L.A.C. (4th) 134 (Brandt).

2 [2010] O.L.A.A. No. 347 (Etherington).

3 (2009), 101 C.L.A.S. 195 (Hall).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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