Denying Employees’ Benefits Based on Age is Discrimination and Unconstitutional
August 23, 2018 By: Karine Dion Read Time: 4 minutes
Print

Nelligan O’Brien Payne gratefully acknowledges the contribution of Grace Tran, Student-at-Law, in writing this blog post.

While mandatory retirement ended over ten years ago, older workers are unfortunately not immune from age-related discrimination.

In Talos v. Grand Erie District School Board, the Human Rights Tribunal of Ontario looked at a situation where an older worker lost his employment benefits when he reached the age of 65.

Discrimination

Background

When Steve Talos turned 65, he wanted to continue working as a teacher. However, at this time, the Grand Erie District School Board (“School Board”) decided to terminate his benefits.

On May 18, 2018, the Ontario Human Rights Tribunal (“Tribunal”) found that the School Board was wrong to exclude Mr. Talos from their benefit plan simply because he had turned 65. The Tribunal made it clear that denying benefits to an employee based on age is discrimination and a violation of the Canadian Charter of Rights and Freedoms (“Charter”).

Highlights of the Tribunal’s decision 

Section 25(2.1) of Ontario’s Human Rights Code (“Code”) and section 44 of Ontario’s Employment Standards Act, 2000 allow employers to terminate benefits for workers over age 65. Mr. Talos claimed these sections violated his equality rights under the Charter. More specifically, he alleged that these sections infringed his right to not be discriminated against because of his age. The Tribunal agreed with Mr. Talos and found the respondent School Board to have failed to justify the infringement under section 1 of the Charter.

In its analysis, the Tribunal stated the relevant provisions created a distinction between workers under 65 and workers over 65. While both groups were doing equal work, the workers over 65 were vulnerable to losing a portion of their renumeration package.

The Tribunal also stressed that its decision pertained to employment benefits as part of the employee’s total compensation package. Employment benefits are distinct from benefits derived from a private or government contributory pension plan or a government social benefits plan. In other words, at issue for Mr. Talos was earned compensation for his work, which included his salary and benefits. The Tribunal highlighted that an individual worker’s wealth or status as a professional or a union member is not a relevant consideration. That is, an employee’s entitlement to equal wages and benefits for work performed is not linked to their personal financial circumstances.

Implications for employers, employees and the law

This decision from the Tribunal could have several implications for employers, employees and the law.

From an employer’s perspective, this decision impacts the benefit plans they may offer. As of the date of this decision, Ontario employers can no longer rely on the Code to defend benefit plans that terminate an employee’s coverage at age 65, or arguably any other age.

Accommodating unplanned, continuing employee benefits could pose financial difficulties for some employers. The Tribunal expressly distinguished Mr. Talos’ case from the situation that arose in Chatham-Kent (Municipality) v. O.N.A. (O’Brien) (Re). In Chatham-Kent, the arbitrator found that terminating benefits for employees after age 65 infringed the Charter, but was a reasonable limit. The Tribunal distinguished Mr. Talos’ case given the different fact scenarios, and also that there is now evidentiary data available relating to the sustainability of benefit plans that was not around at the time of Chatham-Kent. More specifically, from the evidence presented to the Tribunal, the assumption that benefit costs increase steeply when employees enter their 60’s was not proven. As a result, the Tribunal was confident that financial viability of workplace benefits plans could be achieved without making the age 65 and older group vulnerable to loss of employment benefits. It remains to be seen how this decision will affect employers with varying degrees of ability to continue to pay benefits for employees over age 65.

From an employee’s perspective, this decision establishes that compensation should be based on an employee’s work, not their age. Even though Ontario passed Bill 211, the Ending Mandatory Retirement Statute Law Amendment Act, in 2006, which ended mandatory retirement of workers when they turn 65, this was not an end to differential treatment for these workers. The Tribunal established it is no longer permissible for employers to provide unequal benefits to employees age 65 and older, on a non-actuarial basis, compared to employees age 18 to 64. For employees, this decision means employers seeking to justify reducing or eliminating benefits must do so on an actuarial basis.


From a legal perspective, it remains to be seen whether the Tribunal’s decision will be appealed. If the decision goes up for judicial review it will be interesting to see what standard of review the court applies. On the one hand, since this decision involves a tribunal interpreting its home statute, it may attract deference and a reasonableness standard. However, this decision involves a human rights question with widespread implications and interpretation of the Charter. As a result, the court may be inclined to review the Tribunal’s decision on a correctness standard. Either way, should the decision be judicially reviewed it will be a case worth following for constitutional, administrative and employment law purposes.

From any perspective, this decision certainly comes across as a victory for senior workers.

For more information about employment benefits and retirement, contact our Employment Law Group.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2018 Nelligan O’Brien Payne LLP.