Discrimination and Benefit Plans: Can You Offer Less to Employees Over 65?

From our January Newsletter

From time to time, Hicks Morley, our legal counsel, provides us with insights into a current issue relating to benefit plans. The following article addresses the matter of reducing benefits to employees over age 65. It was prepared by Lisa Mills, Partner, and Rebecca A. Lee, Associate, both of whom are members of Hicks Morley’s Pension and Benefits Practice Group



Historically, the Ontario Human Rights Code prohibited discrimination in employment on the basis of age for employees between the ages of 18 and 65 years. In 2006, the Human Rights Code was amended to remove the upper limit of age 65, thereby prohibiting discrimination on the basis of age for any employee over age 18.  As a result, mandatory retirement at age 65 is no longer available in virtually all of Ontario’s workplaces.  At the same time, the Human Rights Code was also changed to permit employers to differentiate on the basis of age in an employee benefits plan as long as the plan complied with the Employment Standards Act, 2000 (“ESA”) and its related regulations. The ESA regulations allow for distinctions in employee benefit plans after age 65.

Ontario Nurses’ Association and Municipality of Chatham-Kent

Following these changes to the Human Rights Code, the Municipality of Chatham-Kent and the Ontario Nurses Association (“ONA”) negotiated a collective agreement that provided for reduced levels of benefits for employees aged 65 or older, and provided no LTD or AD&D coverage for these employees. Despite having negotiated the provisions, ONA then challenged these collective agreement provisions. ONA alleged that the collective agreement violated the Human Rights Code and the equality rights set out in the Canadian Charter of Rights and Freedoms.  More importantly, ONA also argued that provisions of the Human Rights Code allowing for differentiations in employee benefit plans at age 65 were also contrary to Charter equality rights.

This matter was put to arbitration in November of 2008 and was heard over several dates in 2009. On October 31, 2010, the arbitrator issued his award. He determined that the relevant provisions of the collective agreement and the Code do violate the Charter, and concluded that the distinctions they draw between workers under age 65 and those over that age constitute discrimination. However, he went on to find that these provisions are a reasonable limit on the equality rights of the Charter and are therefore “saved” by section 1.  Section 1 of the Charter, known as the “reasonable limits” clause, allows for infringements on individuals’ Charter rights, provided that the infringements have a justifiable purpose, and the benefit of the infringement does not outweigh the seriousness of the breach of the individual’s rights. In summary, the arbitrator found that while there was a limitation on the rights of employees over 65, from a social policy perspective, it was justifiable.

What Does This Mean For Your Workplace?

Barry Brown of Hicks Morley, who argued the case on behalf of the Municipality of Chatham-Kent, says “This decision is good news for employers. Most benefit plans were negotiated or developed when all employees retired at age 65, and as a result many plans do not offer benefits past that age. With the elimination of mandatory retirement, employers have had to determine, given the increased cost and limited availability of benefits for older employees, whether they can provide a different package of benefits to those employees who stay on past 65. Unless overturned by the courts, this decision supports the position that Ontario employers are permitted to reduce or eliminate employee benefits once an employee reaches age 65.”