Canada: December 12, 2006: Mandatory Retirement Will Be Illegal In Ontario

Last Updated: December 15 2005
Article by Michael Horan

December 12, 2006 Effective Date

The "Ending Mandatory Retirement Statute Law Amendment Act, 2005", also known as Ontario Bill 211, received Royal Assent on December 12, 2005. After the one-year phase-in period, mandatory retirement will become illegal in Ontario on December 12, 2006.

Is Your Company Or Organization Affected?

Bill 211 does not apply to federally-regulated employers such as banks, airlines, railways and telephone companies. All other Ontario employers, regardless of size, must comply with Bill 211.

What Should Employers Do Before December 12, 2006?

  1. Almost all employers with a mandatory retirement policy must eliminate it before December 12, 2006. Only in rare cases will a blanket mandatory retirement policy be justifi ed as a bona fi de occupational requirement.
  2. Similarly, employers should check their other policies to eliminate any references to mandatory retirement.
  3. In place of a mandatory retirement policy, non-union employers should implement a performance management policy that applies to all employees. The policy should set reasonable standards for performance and provide appropriate accommodation for employees who because of age or disability cannot meet those standards.
  4. Unionized employers with mandatory retirement language in the collective agreement should begin discussions with the union about the elimination of mandatory retirement.
  5. Although employers with benefi t plans will not be required to extend benefi ts to employees who are age 65 and over, employers may wish to investigate doing so.
  6. Employers with pension plans should review their plan text to ensure that:
  7. a. The pension plan does not prohibit employees from being members of the plan or accruing pension benefi ts after the "normal retirement age"; and

    b. The pension plan does not require employees to retire at the "normal retirement age".

  8. Employers should be aware that an employee whose last day of work falls after December 12, 2006 will likely be protected from age discrimination even if he or she was notified of the termination before that date.

Background

Elimination of Age 64 "Cap" on Age Discrimination - Effective December 12, 2006, employees who are 65 or older will be protected from age discrimination in employment. On that date, the age 64 "cap" under the Human Rights Code will be eliminated so that any employee who is 18 years of age or older may fi le an age-discrimination complaint.

Mandatory Retirement Policies - Ontario law has never required employees to retire at age 65. Instead, until December 12, 2006, employers will be permitted to force employees to retire at or after age 65. After December 12, 2006, employers may not force employees to retire because they are age 65 or older.

Collective Agreements - Similarly, after December 12, 2006, mandatory retirement provisions in collective agreements will be illegal. Employers will be required to show just cause before they can terminate the employment of unionized employees who are age 65 or older.

Pensions, Workers' Compensation and Benefit Plans - The status quo will prevail for pensions, workers' compensation and benefi ts plans. Employers may continue to have benefi t plans in which coverage ends on an employee's 65th birthday. The workers' compensation benefi t system is not affected, so that workers over age 64 will not be eligible to begin collecting benefi ts. Pension plans may still have a normal retirement age of 65. Pension benefi ts already earned will not be affected. These distinctions may, in the future, be challenged under the Charter of Rights and Freedoms as discriminatory on the basis of age.

Termination of Employment of Employees Aged 65 or Older - The Ontario Human Rights Commission has for some time advocated for the elimination of mandatory retirement. We expect the Commission to vigorously pursue age discrimination complaints from workers who are age 65 or older. The Commission will scrutinize whether the employee's age was a factor in each case. Where the employer cannot show a good reason for the termination, the Commission may assume that the termination was age-related. For this reason, employers need to be particularly careful when terminating the employment of older workers.

Termination Costs May Increase - For non-union employers, perhaps the main advantage of mandatory retirement policies is that they provide advance notice of termination of employment. This advance notice generally satisfi es common law notice requirements and only Employment Standards Act severance pay may be owing when the employee retires. With the elimination of mandatory retirement policies on December 12, 2006, employers will be required to provide individual notice or pay in lieu of notice as well as applicable severance pay. The members of FMC's Ontario Employment and Labour Group would be pleased to discuss how these changes will impact your organization.

This bulletin is designed to supply a summary of recent legislative or other initiatives of interest. The summaries and comments provided are, of necessity, brief and should not be relied upon as legal advice. We encourage you to contact any of the lawyers listed above for further details or advice. 

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