Chapter 12: Resignation and Retirement

Retirement Policies in Ontario

Overview of Retirement Age

In Canada, public and most private pension plans typically assume a retirement age of 65. However, there has never been a specific legal requirement for employees to retire at this age. This indicates that there is flexibility regarding the retirement age at which employees can choose to leave the workforce.

Mandatory Retirement Policies Prior to 2006

Until 2006, Ontario's legislation allowed—not mandated—employers to maintain mandatory retirement policies for employees aged 65 or older. The rationale behind this was linked to the Ontario Human Rights Code, which provided protection against age-based discrimination only for individuals between 18 and 64 years old. Therefore, those aged 65 and above were less protected by these anti-discrimination laws.

Removal of Mandatory Retirement

In December 2006, the Ontario government amended the Human Rights Code, effectively eliminating the age ceiling. This legislative change meant that mandatory retirement policies could no longer be enforced unless the employer could prove that such a policy was a bona fide occupational requirement (BFOR). The removal of this ceiling aimed to enhance job security for older adults and provided them with greater autonomy in deciding their retirement age.

Implications of Abolishing Mandatory Retirement

1. Legal Restrictions on Mandatory Retirement: With the elimination of automatic retirement at 65, Ontario employers can no longer uphold mandatory retirement policies unless they meet the stringent requirements of BFOR. Only a handful of occupations—such as policing, firefighting, and aviation—may qualify under this guideline due to safety priorities and skill exigencies.

2. Increased Demand for Accommodations: Following this legislative change, employers have observed a significant rise in requests for workplace accommodations due to aging-related disabilities. Employers are legally obligated to accommodate these disabilities to the point of undue hardship. Common accommodations include flexible working hours, compressed workweeks, phased retirements, and lateral moves to less demanding roles.

3. Careful Performance Evaluations: There is now more scrutiny required when terminating the employment of older workers. Employers must ensure that terminations are well-documented to avoid potential claims of age discrimination or wrongful dismissal. The updated interpretation of age definition under the Human Rights Code requires employers to justify performance-related dismissals of older employees rigorously.

4. Legal Precedents and Compensation: Notable cases, such as Wilson v. Ontario, highlight the risks associated with mishandling terminations. In this case, the employee received an additional $20,000 in damages due to the employer's failure to accommodate her health condition, which was linked to the decision to terminate her employment. Claims of wrongful dismissal are frequently paired with complaints regarding violations of the Human Rights Code, leading to significant damages awarded to the complainants when both are proven.

5. No Assumption of Retirement Intent: In the case of Fillatrault v. Tri-Country Welding Supplies Ltd, the court ruled against the assumption that older employees intended to retire simply due to their age. Evidence showed that the employees, even in their 80s, were actively seeking new job opportunities, which underscored the importance of not making age-based assumptions regarding retirement intentions.

Risks Associated with Dismissing Older Employees

Employers face significant legal risks when dismissing long-term older employees. The termination date can sometimes be interpreted as a forced retirement date, and as a result, the reasonable notice period could extend to the employee’s expected retirement date. This aspect adds complexity to the management of older employees.

Early Retirement Incentives

Early retirement incentives can be legally offered as long as the offer is well-intentioned and does not exert undue pressure on employees to accept the retirement option. In Deane v. Ontario, an employee was awarded $7,000 for damages related to her dignity after being pressured into considering retirement options improperly. Such instances highlight the sensitive nature of handling retirement discussions and the potential backlash from poorly managed engagements.

Employer's Retirement Context

Employees who are laid off due to their employer retiring must still receive reasonable notice according to common law. This suggests that even in situations where the employer decides to retire, they maintain obligations towards their employees to provide appropriate notice before termination.