Canada: Why Older Workers Are Getting An Upper Hand Over Their Employers

Last Updated: May 16 2014
Article by Howard Levitt

Age has become the word that cannot be spoken. Workers in their fifties and sixties comfort themselves with the notion it is just a number. Mostly, the courts and legislatures agree. But when older employees are terminated, age becomes a number writ large both in the litigation and in the amounts courts award.

Now that there is no mandatory retirement, employees are free to work as long as they wish. And many do, for a variety of reasons; the lack of a pension, the stimulation their jobs provide, their spouse not wanting them around the house (my personal plight) or because they have developed no other interests. As well, many older employees are an asset because they bring years of skill, experience and judgement to the job.

Yet, many employers yearn for the time when they could ask employees to leave at age 65 without the expense of building up a case for cause based on incompetence, or of having to accommodate age-related disabilities, not to mention the risk of the court finding that incompetence was condoned over many years, or even the risk of a human rights finding that the employer is targeting older workers for dismissal and consequently awarding additional damages and/or reinstatement.

Abolishing mandatory retirement only benefited employees. Even when the law permitted it, the employer could allow any employees they wanted to work past 65. Smart employers would, and often did, permit, and even offer incentives for, productive older employees to work until they dropped.

It was also easier for employers to retain younger workers when they could promise that positions would open up as older workers retired. Now, succession planning based on older workers moving on is itself a violation of the Human Rights Code.

The difficulty for employers is not merely that older workers now must be paid wrongful dismissal damages if the employer wishes them to leave but that, if an employer chooses to disproportionately dismiss older workers, those workers could go to the human rights commissions and, in Ontario also the courts, for additional damages and even reinstatement.

Because the most significant factor in determining the amount of a wrongful dismissal award is re-employability, older workers have been doing very well, as highlighted in some recent cases:

— Edwin Schulz, a 71-year-old branch manager for NRS Block Bros., who had worked for only 24 months was held by a B.C. court to be entitled to 18 months severance;

— Niranjan Kotecha, a machine operator for Affina Canada ULC, who was terminated at age 70 after 20 years of service, received 22 months from an Ontario court;

— Arnold Abramson, a 66-year-old dentist, who worked for almost 13 years for Windsor Essex County Health Unit, was awarded 18 months by an Ontario court;

— Roger Systad, a 65-year-old driver for Ray-Mont Logistics Canada, who was employed for 19 years was entitled to 18 months, a B.C. court found; and

— Syed Hussain, a 65-year-old junior supervisor at Suzuki Canada, who had worked for the company for 36 years, was awarded 26 months by an Ontario Court — an amount usually reserved for the most senior, long-serving executives.

The courts have come to recognize that lower-skilled, older employees may encounter significant difficulties (and lengthy delays) in finding alternative employment.

The law of unintended consequences, as always, applies. These lengthy notice periods i.e. higher wrongful dismissal damages (a judge-created rule) awarded to older employees and the fact that the employer cannot force them to leave without severance at age 65 ( a legislative rule) combines to make employers reluctant to hire them.

Because this trend is likely to continue for the foreseeable future,  employers need to take into consideration greater severance awards when hiring employees or in amending existing employment agreements by inserting a termination clause in the employment contract (or collective agreement in a unionized workplace) that limits their entitlement at termination.

Existing employees, however, will be reluctant to readily accept such a reduction in their entitlement. In those cases, employers would need to work out a strategy to induce the employee to sign such an agreement, say by offering a bonus or other benefit. Without such a payment, the new contract will be unenforceable.

Beware, however, that providing incentives for early retirement based even in part on age is discriminatory hence illegal.

Similarly, offering termination incentives for all employees to reduce their workforce is foolish and short-sighted. Invariably, the more marketable employees take the package and quickly find other work.

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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