The Ontario Retirement Pension Plan: A Primer

Feb 9, 2016

The Ontario Retirement Pension Plan: A Primer

As I reported in December 2014, the Ontario government intends to introduce the Ontario Retirement Pension Plan (ORPP) for some employers effective January 1, 2017.

The ORPP is Being Phased In

The ORPP will be phased in over 3 years. Contributions for employers with 50 to 499 employees without registered workplace pension plans start January 1, 2018, and contributions for employers with 49 or fewer employees without registered workplace pension plans start January 1, 2019.

More details concerning the ORPP have recently been released

On January 26, 2016, the Ontario government released a Technical bulletin on the ORPP.

At the same time, the Ontario government published a guide to the ORPP for employers.

Required Employer and Employee Contributions to the ORPP

By 2021, the required contribution rate for both employees and employers will be 1.9% of an employee’s annual earnings up to $90,000, subject to a minimum earnings threshold of $3,500 unless an employee is a member of a “comparable” workplace pension plan.

Most Employers Will Be Required to Join the ORPP

According to the National Post, two out of every three Ontario employees are not currently enrolled in a pension plan. This means payroll costs will be going up for many small & medium size employers.

Five (5) Frequently Asked Questions about the ORPP

This blog answers 5 questions about the ORPP.

  1. Which employees are covered by the ORPP?

Employees will be considered to be employed in Ontario if they report to work at an employer’s establishment that is located in Ontario. If they do not report to work at an establishment of their employer (e.g., employees who work from home), they will be considered to be employed in Ontario if they are paid from an Ontario based establishment.

  1. Are Defined Contribution Registered Pension Plans considered “Comparable” plans?

A defined contribution registered pension plan will not be considered comparable if contributions are voluntary. Only defined contribution registered pension plans with a mandatory 8% contribution formula, 4% of which must be employer contributions, will be considered comparable.

  1. What are the Age and Contribution Limits?

The minimum age of participation is 18 years old and the maximum age of participation is 70 years of age.

  1. Are there Survivor Benefits?

Survivor benefits under the ORPP will be payable to the surviving spouse of a member or his or her beneficiary or estate where the member’s death occurs pre-retirement.

  1. When can an employee start collecting ORPP benefits?

ORPP benefits will begin to be paid out in 2022 (except where the Income Tax Act requires payments earlier). Ontarians who retire after making contributions to the ORPP would be eligible to begin receiving a pension at age 65, with options to receive adjusted benefits as early as age 60 or as late as age 70.

For more than 25 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship including changes to Ontario’s employment legislation. If you have any questions, you can contact him at 416 317-9894 or at [email protected]

There are many ways to attack the termination clause in an employment contract. 

I am now surprised if employee counsel does not claim that their client’s  termination clause is not legally enforceable - usually because the termination clause does not allegedly comply with the Employment Standards Act.

This blog considers a case, McKercher v Stantec Architecture Ltd., 2019 SKQB 100, where an employee successfully attacked the termination clause in his contract because he did not explicitly agree to it after being promoted. 

The Facts

In 2006, Mr. McKercher commenced employment as a staff architect. The termination clause in his employment contract stated: 

Termination other than for cause will be with notice or pay in lieu of notice, based on your length of service. If the Employer terminates your employment for other than just cause you will receive the greater of:

  1. a)   Two weeks notice or pay in lieu of notice during the first two years of employment increasing by one week for each additional completed year of employment to a maximum of three months notice or pay in lieu of notice.


  1. b)   The minimum notice of termination (or pay in lieu of notice) required by applicable statutes.

Eleven years later, when Mr. McKercher was employed as a Business Centre Sector Leader, his employment was terminated. The employer paid him the three months termination pay he was owed under his employment contract.


Another way to attack a termination clause: What is the changed substratum doctrine?

An Ontario judge in a 2012 case, MacGregor v National Home Services, 2012 ONSC 2042 (CanLII), described this legal doctrine as follows: "The changed substratum doctrine … provides that if an employee enters into an employment contract that specifies the notice period for a dismissal, the contractual notice period is not enforceable if over the course of employment, the important terms of the agreement concerning the employee’s responsibilities and status has significantly changed."


The rationale for this doctrine has been described by one judge, Schmidt v AMEC Earth & Environmental Ltd., 2004 BSCS 2012 (CanLII), as follows: "In my view, it was incumbent on the defendants to advise Mr. Schmidt that they intended to continue to rely upon the termination provision set out in the Agreement when substantial changes in his employment occurred. This would have allowed him to consider the matter and to negotiate for other terms. If the defendants wished to continue to rely on the termination provisions there ought to have been a ratification of the provisions as the nature of Mr. Schmidt’s employment changed."



The judge hearing this case relied on the following factors when deciding not to enforce the termination clause in the employment contract: ”...there is no evidence that (the employer) made it clear to the (employee) that the notice of termination provisions were intended to apply to the positions to which he was promoted. The employment agreement contains no express wording to this effect, nor does it contain any wording to support the inference of such an intent. Further, and in keeping with the analysis in Schmidt, the Court received no evidence that, as it promoted the plaintiff, SAL reasserted its understanding and expectation that the notice of termination limit would remain in effect.”


Lesson to be learned:

An employer should make it clear that the termination clause in an employment contract applies when an employee is promoted. This expression of this intent should be in writing and should be clear and unambiguous. I recommend that an organization’s employment be reviewed by an employment lawyer every year or two. If your employment contract does not address this issue then think about doing so the next time it is reviewed.


For 30 years, Doug MacLeod of   the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.



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