Case Law Update: Age-Based Distinction in Long-Term Disability Benefit Plan Justified under Section 1 of the Charter – JD Supra

Stikeman Elliott LLP
In Rayonier v. Unifor, Locals 256 and 89 (the “Decision”) the long-term disability (“LTD”) coverage provided by Rayonier (the “Employer”) under the parties’ collective agreement was challenged by Unifor, Locals 256 and 89 (the “Union”) on the basis that by ceasing LTD coverage for employees aged 65 and older, the Employer was discriminating against employees on the basis of age. The Union further argued that provisions under the Human Rights Code (Ontario)(“HRC”), the Employment Standards Act (Ontario) and the Benefit Plans regulations thereunder (“ESA”) – which exclude age-based distinctions under the terms of certain benefit plans for employees aged 65 and older from the prohibitions on age-based discrimination under the HRC and ESA – violate section 15(1) of the Canadian Charter of Rights and Freedoms (the “Charter”). Section 15(1) of the Charter provides that every individual is equal before and under the law, including the right to the equal protection and equal benefit of the law without discrimination based on age.
Arbitrator Knopf found that because LTD coverage terminated when active employees reached the age of 65, leaving them without a benefit available to younger workers, this differential treatment amounted to prima facie discrimination under section 15(1) of the Charter. However, it was ultimately found that the age-based restriction under the LTD plan incorporated into the parties’ collective agreement was justified under section 1 of the Charter, which guarantees the rights and freedoms set out in the Charter subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.
In determining that the age 65 limit for LTD coverage was reasonably justified, the following were cited:
In addition to the challenge to the age-based restriction in the LTD plan, the Decision also considered other grievances related to life insurance coverage, which were upheld based on the interpretation and application of the terms of the parties’ collective agreement. Therefore, employees aged 65 and older were entitled to life insurance coverage, which added to the suite of other benefits provided after LTD coverage ceased at age 65.
This Decision identifies a number of considerations for employers when deciding how to structure workplace benefits, especially when obtaining coverage for employees aged 65 and older. While employers can still rely on the exceptions under the HRC, and ESA, it would be prudent to carefully evaluate any age-based cut-offs for employees aged 65 and older. As noted in the Decision, prohibitively high costs or the inability to source certain types of benefits for employees past age 65 can support a distinction in the level of coverage provided to different employees based on age; however, where cost and availability do not significantly affect the provision of certain types of benefits to workers aged 65 and older, it would be harder to justify differential treatment, especially where no offsetting or alternative benefit is available.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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