Once thought to be part of the Canadian social fabric, mandatory
retirement has been under steady attack for many years. Recently, a
British Columbia court took one more swipe at it by allowing a law
firm partner to resist a directive to retire from practice.
Fasken Martineau, like many law firms and other professional
practices, had a mandatory retirement policy for its partners. When
John McCormick, a partner at Fasken's Vancouver office,
reached the age of 65, Fasken attempted to enforce this policy.
Although mandatory retirement is largely prohibited across
Canada, Fasken believed its partnership retirement policy to be
legal because McCormick was an "equity partner"
— he held a percentage ownership interest in the firm
— and, as such, could not be an employee. Under
traditional partnership law, if a member of a partnership is a
partner, then it is not legally possible to also be an
Partner can be employee: Tribunal
McCormick challenged Fasken's retirement policy before
the B.C. Human Rights Tribunal, expressing his desire to continue
to practice at Fasken.
Because McCormick was not in an employment relationship, Fasken
moved for summary dismissal of the complaint, asserting his
partnership status barred him from making a discrimination
complaint. McCormick was an owner and therefore could not, in
effect, sue himself, the firm argued.
The tribunal was unwilling to make such a technical distinction.
For the purpose of B.C. human rights legislation, a partner could
be an employee, said the tribunal in permitting the case to
proceed. Although the tribunal accepted McCormick was a partner
under the tenets of partnership law, it held there could be
multiple legal perspectives. Fasken was a large law firm and
McCormick's interest was small; just one of many partners.
In practical terms, his small interest did not allow him to
exercise control, said the tribunal. A partnership management
agreement placed effective control in the hands of an executive
committee and a CEO, who managed Fasken's affairs and the
firm's relationship with its partners. In that sense, the
tribunal considered McCormick was more an employee than a
The tribunal applied a well-established doctrine that the
interpretation of employment in human rights legislation should be
broad and liberal. In addition, control has a long-standing place
in employment law as the seminal consideration in distinguishing
employees from independent contractors.
Fasken appealed to the B.C. Supreme Court, which upheld the
tribunal's decision in June 2011.
"While in other partnerships the contract governing
their relationship may not repose in a small group the power to
manage the business of the firm, and the authority to exercise
employment-like controls over the actions of the partners and their
work product, Fasken's partnership agreement clearly
contemplates the kind of control that is traditionally present in
an employer/employee relationship," said the court.
Lessons for employers
In the 1990 decision McKinney v. University of Guelph,
the Supreme Court of Canada put up a powerful defence of mandatory
retirement, stating it was part of the fabric of the Canadian
labour market and seemingly enshrining it in Canadian law. However,
since then, courts, tribunals and legislatures have questioned and
restricted the application of mandatory retirement.
The McCormick decision has ramifications for Canadian businesses
of various types and sizes:
This decision will likely have application beyond large,
professional partnerships to include accounting firms, professional
consulting practices and corporations with a small number of owners
who exercise effective control over operations.
Many shareholder and partnership agreements have provisions for
mandatory retirement. In light of this decision, these agreements
should be reviewed.
Businesses which are potentially susceptible to similar attacks
by their owners may wish to review their current management
structure. Fasken's structure left the majority of its
partners with little autonomy, leading the tribunal to find that
equity partners were like employees. It is possible that with a
management agreement permitting greater autonomy, such as
membership in the executive committee, the decision might have been
McCormick is yet another reminder that employers will have to
increasingly adapt to an aging workforce. As mandatory retirement
disappears, other approaches will need to be taken relating to the
employment of older workers. See McCormick v. Fasken Martineau
Dumoulin LLP, 2011 CarswellBC 1340 (B.C. S.C.) and McKinney v.
University of Guelph, 1990 CarswellOnt 1019 (S.C.C.).
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