• ensuring expectations are articulated and performance measures are communicated;
• identifying how the new hire's strengths align with the manager's own behavioural style; and
• advising on the most critical behaviours for new hires to demonstrate in their early weeks after joining an organization.  

On December 12, 2005, Bill 211, Ending Mandatory Retirement Statute Law Amendment Act, 2005 received Royal Assent and is scheduled to come into force exactly one year later in December 2006, providing employers and employees with a transition period to adjust and prepare for the changes.

Currently, the Ontario Human Rights Code establishes a lower and upper age limit to age discrimination protection. It ensures that employers cannot discriminate on the basis of age if the person is between the ages of 18 to 65; once an individual reaches age 65 there is no protection in the Code against discrimination by the individual's employer. As a result, an employer is permitted to put in place a mandatory retirement plan (policy) and force employees to retire once they turn 65.

What the new legislation (Bill 211) does is remove the upper age limit of 65 in the Ontario Human Rights Code. This helps to eliminate age discrimination to employees 65 and older, making it illegal to force employees to retire merely because they are 65 or older. Alternatively, it doesn't prevent employees who want to retire from doing so. After the passage of the one year transition period, an employer could enforce a mandatory retirement plan only if it is made in good faith and with a genuine purpose by establishing a Bona Fide Occupational Requirement (BFOR) or meeting an explicit exception under the Human Rights Code (i.e. pension plan). The Bill also makes consequential changes to the Employment Standards Act, and maintains the age based provisions status quo in the Workplace Safety and Insurance Act.

Until the legislation comes into force, the current rules regarding mandatory retirement remain in place and employers may require employees to retire at 65 in accordance with employers established mandatory retirement policies.

Some employers may need to adapt their human resources policies and practices to comply with the new law. What does this mean for employers?

Bona Fide Occupational Requirement (BFOR)

The Bona fide occupation qualification exception takes into account the essential requirements of specific jobs, especially when there are legitimate safety factors to be considered. If an employer meets the stringent test from the Supreme Court of Canada in Meiorin (see below), a mandatory retirement policy can be used.

This means mandatory retirement would continue to be justified where it is a "bona fide occupational requirement" (BFOR) determined under the Human Rights Code; this occurs when the nature of a job and performance of essential duties requires that an employee stop working at a specified age (which could be 65 or even younger). In such cases, the employer must show that:

• An age-based job requirement or qualification is a BFOR,
• The employee does not meet the job requirement or qualification, and/or
• The employee could not be accommodated without causing undue hardship to the employer.

The Human Rights Commission will assess whether or not such a plan is Bona fide. It is an extremely difficult test to meet and is generally acceptable in safety sensitive jobs where there are legitimate concerns regarding the ability of older workers to perform the job.

The stringent test of what constitutes a BFOR examined by the Supreme Court of Canada in British Columbia (Public Service Employee Relations Commission) v. B.C.G.S.E.U., also known as the Meiorin decision establishes that:

• the employer adopted the fixed age job requirement for a purpose rationally connected to the performance of the job;
• the fixed age job requirement is imposed honestly, in good faith and with a sincere belief on the part of the employer that such limitation is necessary for the safe or effective carrying out of the work, and not for ulterior or extraneous reasons designed to defeat the purposes of the code; and
• the fixed age job requirement is demonstrated to be necessary on an objective basis for carrying out the work and that it is not possible to accommodate individual employees sharing the characteristics of the claimant without imposing undue hardship upon the employer.

Any Bona fide pension, retirement or group employee insurance plan exception will be subject to the same stringent test as in Bona fide occupation qualification exception. Complaints of age discrimination will still be accepted when an employee is forced to retire at a certain age even if there is a pension plan. Again, the Human Rights Commission will assess whether or not such a plan is bona fide.

Termination

Currently, the Employment Standards Act (ESA) provides that an individual whose employment is terminated at 65 as a result of a mandatory retirement policy or practice is not entitled to notice of termination or pay in lieu.

As of December 12, 2006, if the employee decides to retire, the employer would have to provide termination notice or pay-in-lieu of notice. However, employees who continue to be subject to a mandatory retirement policy or practice permitted under the Human Rights Code (justified on BFOR grounds) would not be entitled to notice of termination or pay in lieu.

To give full force to the above provision, in the coming months, the government must make changes to ESA Regulations dealing with entitlement to termination notice or termination pay to make it apply to employees regardless of age, unless the mandatory retirement policy could be justified on BFOR grounds.

The government has indicated that the severance pay exemption will not be changed in cases where an employee receives an unreduced pension.

Given that the court recognizes older workers have tremendous difficulties in finding alternate employment, it is expected that employers will be faced with hefty severance packages. In Emery v. Royal Oak Mines Inc., a senior employee who had worked for a company for 30 years was entitled to 30 months notice.

Monies earned by the employee, and pension benefits received during the notice period, were not deducted from the damages for lost salary the employee obtained at trial. Payment of these severance packages can only be controlled by a complete revision to, or implementation of employment contracts in order to limit exposure on any termination.

Employee Benefits

Currently, employers are prohibited from discriminating on the basis of age in providing benefits to employees aged 18 to 64. This provision will remain in place.

Once someone turns 65 and continues to work, it is at the employer's discretion whether to continue offering benefits such as disability plans, life, dental and health-care coverage. Individuals 65 and over would continue to be eligible for government benefits such as the Ontario Drug Benefit Plan.

Given that prescription drug and medical coverage is very expensive for individuals over the age of 65, it may be tempting for employers to simply refuse coverage to employees over the age of 65. But this tactic is not recommended as it would undoubtedly expose the employer to an age-discrimination challenge under the Code. Employers should discuss with their Insurance carrier how to contain their benefit cost.

It is expected that claims of alleged discrimination when employees reach the age of 65 and lose their benefits or having benefits different than those available to other employees will increase.

Workplace Safety and Insurance Benefits

Age-based provisions in the Workplace Safety and Insurance Act will be exempt from the prohibition against age discrimination in employment and in the provision of services.

This will maintain the status quo by ceasing loss of earnings (LOE) benefits at age 65 for workers who were less than 63 at the time of injury. Workers aged 63 or more at the time of injury continue to be entitled to receive up to two years of LOE benefits.

An employer's obligation to re-employ ends at age 65; this is because the WSIA will be exempt from the prohibition on age discrimination, this provision will continue to apply.

Employees over 65 years of age who are injured or become ill on the job will no longer be covered under the Workers' Compensation system.

Pension Plans

Ending mandatory retirement will not have an impact on pension benefits already earned. Employees can continue membership in pension plans and accrue benefits past age 65 subject to service or contribution caps.

No changes to the PBA are required to bring an end to mandatory retirement. The PBA already permits members to continue plan membership and benefit accrual past the "normal retirement date" under a pension plan, which is most often age 65, subject to any contributions or service caps in the plan itself.

While the PBA requires pension plans to set a "normal retirement date", which cannot be later than one year after turning 65, it does not require that the member retire at age 65 or any other age. The "normal retirement date" is simply the age at which a member becomes legally entitled to receive an actuarially unreduced pension.

Legislation to ban mandatory retirement would not affect employees entitlement to access CPP at age 65.

Early Retirement Incentives

Employers will be allowed to use early retirement packages as an incentive to promote voluntary exit from the workplace. Because such schemes target an older workforce, employers should be careful about using them as a means of achieving their objectives.  In other words, the employer should not make any link between accepting a job package and job loss, and ensure that an early retirement offer is not coercive. 

Gradual or phased retirements are examples of flexible arrangements that provide an easier transition into retirement. Employers could also develop phased retirement programs utilizing flexible hours and part time arrangements. This can help employees who need to retire, to do so with dignity while providing encouragement for others to stay working.

Duty to Accommodate Under the Human Rights Code

The duty to accommodate obligations under the Code will remain the same. Older workers will not be subject to a lower standard of accommodation than other protected groups.

Once mandatory retirement is prohibited, an employer will have to establish that retirement at the prescribed age constitutes a Bona fide occupational requirement and that it fulfilled its duty to accommodate older workers. 

Meiorin is the leading case on the duty to accommodate. The Supreme Court of Canada held that employers must take an individualized approach to the issue of accommodation by considering the abilities of each employee.  Further, the Meiorin decision appears to have changed the scope of the duty to accommodate from having to take "all reasonable steps short of undue hardship" to having to take "all possible steps short of undue hardship".

With greater numbers of employees working past the age of 65, the obligation of employers to accommodate developing physical ailments associated with aging will also increase. Employers should ensure that they have updated policies regarding requests for accommodation.

Collective Agreements

Collective agreements will not be exempt from a prohibition on mandatory retirement. As a result, after the one-year transition period, collective agreements cannot contain mandatory retirement provisions and employees in unionized environments cannot be forced to retire merely because of age. All existing mandatory retirement provisions in collective bargaining agreements will cease to have effect.

However, unions and employers can still negotiate voluntary retirement incentives (i.e. early retirement packages or phased in retirement plans).

Hiring and Performance Evaluations

Employers should expect the Ontario Human Rights Commission to finely tune these age discrimination issues by December 2006.

Employers will need to take precautions during the hiring process so they can clearly demonstrate the age of the employee played no role in the decision to hire or not hire. For example, comments like "no career potential", "set in his ways", "better for a recent graduate", "will retire soon", and "too much experience", can all be interpreted as euphemisms for "too old".

It will therefore be critical to keep detailed and accurate performance records for all employees, documenting accomplishments and failures. Many employers may wish to explore the use of individualized testing, particularly where there may be health and safety concerns. These tests may include physical endurance or strength tests. The tests, however, have to be carefully designed. In many cases, an employee who fails a test may be a good worker. In Meiorin, a female forest firefighter failed the fitness test but was evaluated by her superior as a good worker. Employers will have to collaborate with medical professionals to design meaningful tests that accurately predict or closely proximate job performance.

A good evaluation system, the conclusions of which are communicated to employees on a regular basis, will be useful in the event the employer chooses to promote a younger employee or dismiss an older worker.

According to a Mercer Human Resources Consulting Communiqué - Mandatory Retirement to End in Ontario (December 14, 2005), there are seven things an employer should do to prepare:

• Conduct demographic assessments of your work force to identify older employees in the next year and in the next 5 years.
• Adopt a workforce management strategy. If older employees need to be retained, consider adapting the requirements of the job to the older employee and introducing phased retirement programs and other measures to entice older employees to stay.
• Adopt a work assessment policy. If you have employees near retirement who are underperforming, document and discuss shortcomings now. Be prepared to fully justify dismissal of underperforming older employees.
• Communicate benefit policies. If you do not intend to provide non-pension benefits to the older employees, let them know now. Consider the consequences of failing to provide such benefits in light of issues raised in the preceding two bullet points.
• Determine the costs of employing older employees and check if insurers are willing to continue benefit programs, the availability of coverage and the related cost. Consider whether it is appropriate or legal to reduce benefit levels in light of any increased cost.
• Do not be misled by myths and preconceived notions. Older employees are not necessarily less productive and more expensive. For example, the continuation of defined benefit pension coverage is not generally more expensive for plan sponsors. Younger workers may indeed appreciate the mentoring of older employees.
• Tie compensation to performance, regardless of age. If pay is indeed a function of performance, reducing the compensation of older employees due to reduced performance will not likely be considered age discrimination.

Perform the above steps now. One year is not a long time; investing the time now to deal with the abolition of mandatory retirement will pay dividends in short order.

Additional Information

The Ontario Ministry of Labour has developed the following documents to help employers and employees understand the implications of Bill 211:

FAQ: Mandatory Retirement Ontario Ministry of Labour

Ending Mandatory Retirement: What It Means To You | Ontario Ministry of Labour

Additional information on BFORs and Meiorin can be found on the Canadian Human Rights Commission :: Publications :: Publications A-Z :: Occupational Requirements and Justifications website.

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