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Mandatory retirement still a working issue for employers

airportIn the recent case of Nilsson v. UPEI, [2010] P.E.I.H.R.B.I.D. No. 1 (Q.L.), a Board of Inquiry in Prince Edward Island affirmed that the exemptions for bona fide Pension Plans in Human Rights legislation may not justify mandatory retirement.

Nilsson dealt with three employees at the University of Prince Edward Island (two Professors and one employee at the Veterinary College), all of whom were forced to retire as a result of the university’s Mandatory Retirement Policy. The three lodged a complaint with the PEI Human Rights Commission. The matter proceeded to a Board of Inquiry.

The university defended its Mandatory Retirement Policy first on the grounds of section 11 of the PEI Human Rights Act, which states:

The provisions of this Act relating to discrimination in relation to age or physical or intellectual disability do not affect the operation of any genuine retirement or pension plan or any genuine group or insurance plan.

The university argued that the above section allowed age discrimination in its case, since mandatory retirement had an effect upon the operational provisions of their pension plan.

Unlike the recent case of New Brunswick (Human Rights Commission) v. Potash Corporation of Saskatchewan 2008 SCC 45 there was no question that the university’s pension plan was “bona fide”.  The only question was whether or not mandatory retirement was necessary for the operation of the plan and therefore justified according to section 11.

The board found that there was a noteworthy difference between the provisions of the Human Rights Act in New Brunswick that were at issue in the Potash case, and section 11 of the Prince Edward Island Act.

The New Brunswick legislation (in a nutshell) indicated that discrimination with regard to age did not apply with regard to “termination of employment … because of the terms or conditions of any bona fide retirement or pension plan.” This is significantly different from section 11, which does not mention termination at all.

As a result, the Board of Inquiry in PEI found that the New Brunswick legislation was “highly unusual”.  For guidance, they turned to decisions from Manitoba and British Columbia, which have similar provisions to section 11.

Those cases ruled that age discrimination provisions in those jurisdictions existed to protect the actuarial requirements of pension plans rather than to allow mandatory retirement. In other words, bona fide pension plans could draw distinctions based on age without violating the Human Rights Act, but this did not extend to justifying mandatory termination.

The university’s alternative argument was that sections 6(4) and 14(1)(d) of the Act allowed discrimination where there was a need for a “genuine occupational qualification”. (Similar to a BFOR.) The university argued that the policy of mandatory retirement was necessary in order to maintain the functioning of the university with regard to concerns such as the preservation of tenure, the promotion of academic renewal, the facilitation of the planning process and the facilitation of resource planning and management.

The Board of Inquiry rejected this argument, holding that whether or not a policy is good for employers is not relevant to the question of whether discrimination has occurred. As there was no question regarding the competence of any of the three complainants, there was no qualification issue.

The upshot of this case for employers and HR professionals is that the wording of human rights legislation in different jurisdictions will have a drastic impact on whether or not a Mandatory Retirement Policy will be permitted. In the absence of some form of bona fide occupational requirement, the wording in jurisdictions such as PEI (and Manitoba and BC) only justifies discrimination with regard to the actuarial terms of a pension plan, and does not allow for mandatory retirement.

Also significantly, this ruling affirms that while there may be significant benefits to an employer by instituting a Mandatory Retirement Policy, this in and of itself is not sufficient to justify mandatory retirement.

Andrew Taillon, Cox & Palmer

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Andrew Taillon

Andrew Taillon was a lawyer in Cox & Palmer‘s Halifax office. He practiced mainly in labour, employment and litigation. Now he is a Barrister & Solicitor at Nova Scotia Department of Justice. Read more
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