A Benefit of Working Past 65: Employee Benefits Must Continue

Jul 31, 2018

A recent human rights decision may result in Ontario employers paying higher premiums for group employee benefit plans.

Mr. Talos was a secondary school teacher and decided to keep teaching after he turned 65 years old even though he could retire and receive a pension and other government benefits. He was financially motivated to continue working because he needed the health benefits. These benefits paid for medical and other expenses in connection with his wife’s serious illness. In this regard, his wife had no employer sponsored benefits and, as she was younger than 65 years old, she did not qualify in her own right for various government income supports like Old Age Security and Ontario Disability Drug Benefits Plan.

When he turned 65, Mr. Talos’ employer terminated his membership and its extended health, dental and life insurance benefits plan pursuant to section 25(2.1) of the Ontario Human Rights Code and section 44(1) and a number of regulations under the Employment Standards Act (collectively referred to as the “Age Exemption”).

Mr. Talos filed an application under the Human Rights Code claiming the Age Exemption violated section 15 of the Canadian Charter of Rights and Freedoms (the “Charter”) and was not saved by section 1 of the Charter.

In this regard,  Section 15(1) of the Charter states:

15(1) Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

And, section 1, that provides both a guarantee of rights and freedoms and justification for limitations on those rights and freedoms, states:

1 The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.

The adjudicator appointed under the Ontario Human Rights Tribunal agreed with Mr. Talos.

He concluded:

The impugned provisions (i.e. The Age Exemption) could have been better tailored to preserve the viability of workplace benefit plans without the “carve out” that left older workers vulnerable to a lessening of their compensation based solely on their age, and not their ability, performance or any other bona fide qualification.” The adjudicator also stated: For greater clarity, this decision does not address long term disability insurance, pension plans and superannuation funds.”

Although the Tribunal’s decision does not address long-term disability insurance, pension plans and superannuation funds, there may be similar challenges in the future to such employee benefits.

We note that the merits of this case have yet to be determined as this is an interim decision. We will keep you updated as this case progresses.

Lessons to be Learned:

  1. The cost of group employee benefit plans may be going up. Employers should therefore speak with their group insurers to find out how much extra it will cost to extend group benefits to employees over 65 years of age.
  2. Depending on the size of the increase in premium costs, employers should start thinking about whether group benefits need to be restructured if Mr. Talos wins his case on the merits and the decision is not overturned on appeal.
  3. I would not be surprised if similar challenges are made to long-term disability insurance and pension plans. If so, employer associations should try to intervene in these cases. The cost of obtaining and presenting expert evidence is expensive and beyond the means of most individual employers. Cases are decided based on the evidence before the decision maker and social science evidence is critically important when considering whether or not “reasonable limits prescribed by law (such as the Age Exemption) … can be demonstrably justified in a free and democratic society.”

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 directly at 416-317-9894 or at [email protected]

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