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Coping with the retirement of mandatory retirement
Mon, 2007-10-15 07:38 — Robert Smithson
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I can confidently predict that, on the morning of January 1, 2008, the world will not come to an end. The sun will come up (here in the sunny Okanagan valley, at least), employees will go to work and grumble about their bosses, and managers will go to work and grumble about their employees. Almost everything will be like any other day at the office.
One thing, however, will be different. Employees at, or over, the age of 65 in British Columbia will no longer fear the imposition of mandatory retirement.
That is, of course, if they ever did fear it. Statistics indicate that few Canadian workers are actually forced to leave the workforce because of their employer’s mandatory retirement policy. One recent survey indicates only approximately 14% of males and 9% of females named the existence of a mandatory retirement policy as one of their reasons for retiring. A Statistics Canada study, “Canada’s Labour Market At A Glance”, indicates the median retirement age in Canada is 61.
Nonetheless, B.C.’s Human Rights Code will experience a number of related amendments as of January 1st and, if you’re counting, that’s less than 3 months away. The key change is that human rights protections will be extended to persons who are 65 years of age or older. One impact of this change will be that retirement policies triggered solely by advancing age will now be unlawful.
For those who are advocates of age discrimination, there’s good news. Employers will still be able to discriminate on the basis of age against persons younger than 19. But, when it comes to older employees, employers will no longer be able to rely on the simple fact of aging as a factor.
The abolishment of mandatory retirement in B.C. is likely to make all employers’ task, in bringing to an end the employment of older employees, much more difficult. The employer will now face the challenge of demonstrating the termination was in no way affected by a discriminatory attitude towards older workers.
This will be no small challenge because any degree of discrimination is sufficient to taint the decision to terminate. The discriminatory reason need not be the sole, or even primary, reason for the termination. Unless an age-related reason amounts to a bona fide occupational requirement (or “BFOR”), it will be prohibited by law.
According to the Supreme Court of Canada, in order to amount to a BFOR, an age-related differentiation must be: adopted for a purpose rationally connected to the performance of the job; adopted in an honest and good faith belief that it is necessary to achieve that purpose; reasonably necessary to the accomplishment of that purpose. To be reasonably necessary means that it must be impossible to accommodate the employee without imposing undue hardship on the employer.
Employers facing discrimination claims and hoping to raise the BFOR defence should beware that anecdotal evidence or stereotypical views of the abilities of older workers will not suffice. The B.C. Human Rights Tribunal is well-equipped to distinguish cogent, objective evidence from subjective stereotypes.
I expect we will, over the next five years or so, see a series of Tribunal decisions assessing whether it is a BFOR, for a particular job, to be under the age of 65. Some recent examples include the position of school bus driver in P.E.I. (where it was ruled it is a BFOR to be under 65) and the position of physician in B.C. (where it was ruled it is not a BFOR to be under 65 to continue to have hospital admitting privileges).
The end of mandatory retirement will have at least four noticeable impacts on the human resources practices of businesses.
First, mandatory retirement policies (if properly implemented) have long served as deemed notice of the eventual termination of employment. This has saved employers the worry of providing working notice of termination (or pay in lieu thereof) to employees nearing the age of 65. Employers will lose the benefit of this deemed notice and will, when terminating the employment of an older employee, have to address the issues of reasonable working notice or pay in lieu thereof.
Second, employers who have relied upon mandatory retirement as their trump card in ridding themselves of problem employees will lose that option. Active management and discipline of difficult employees will have to replace the “let’s just wait him out” strategy which has for so long been available to management.
Third, in any situation involving the termination or dismissal of an older employee, the employer will have to be wary of laying the groundwork for a claim of discrimination. Once again, active management and discipline of problem employees will be required in order to establish a non-discriminatory document trail.
Finally, I expect employers will become more active in the development of retirement incentives. Creative employers will likely find ways to make it pay for older employees to either retire altogether or to move towards a reduce work schedule leading, ultimately, to full retirement. Those incentives could take many forms, from pure monetary payments to enhanced benefits and pension entitlements.
As I’ve said in similar instances, the true impact on the workplace of a change of this magnitude often takes a decade to become apparent. In the meantime, the employment world will surely survive to see another day.
Robert Smithson is a partner at Pushor Mitchell LLP in Kelowna practicing exclusively in the area of labour and employment law. For more information about his practice, log on to http://www.pushormitchell.com/.
