Mandatory retirement: Not so fast!

• Author: Bowal, Peter

"In cases where concern for the employee's capacity is largely economic... it may be difficult, if not impossible, to demonstrate that mandatory retirement at a fixed age, without regard to individual capacity, may be validly imposed..."

--Ontario Human Rights Commission v. Etobicoke, [1982] 1 SCR 202

Introduction

Generally, gone are the days when workers are forced to retire on their 65th birthdays. If Canadian courts and human rights tribunals have not roundly declared that this constitutes illegal discrimination on the basis of age, most employers have simply rescinded their mandatory retirement policies for good business reasons. They do not want to retire skilled and experienced workers, who can be hard to find or train. They know older workers are competent and loyal.

Accordingly, mandatory retirement has moved from the norm to an exception in Canada. It is either prohibited entirely or permitted only if it is based on a bona fide occupational requirement (BFOR), or if accommodating an older worker is an undue hardship on the employer.

In this article, we explore when an employer can dismiss an employee, essentially on the basis of age.

Bona Fide Occupational Requirement

An exception to age discrimination is a situation where employers impose mandatory retirement under a "bona fide" retirement or pension plan. Where there is evidence that age is a relevant criterion in the performance of an employee's necessary duties, an otherwise age-based discriminatory rule may be excused under human rights equality legislation as a BFOR.

The test for a BFOR in the context of age discrimination was established in 1982 by the Supreme Court of Canada in Ontario v. Etobicoke. In that case, the complainant was a firefighter who was required to retire at age 60. The Court set out a two-part test to determine whether a mandatory retirement scheme is justifiable:

(1) Subjective component: the employer must establish that mandatory retirement was imposed honestly, in good faith, and in the belief that the limitation is in the interests of the adequate performance of the work, and not for ulterior or extraneous reasons aimed at objectives which could defeat the purpose of the [Human Rights] Code.

(2) Objective component: the employer must establish that the retirement plan is reasonably necessary to assure the efficient and economical performance of the job without endangering the employee, his fellow employees and the general public.

A mandatory...