As a result of a recent decision out of the Ontario Human Rights Tribunal (the “Tribunal”), employers may no longer be able to exempt employees age 65 or older from their workplace benefits policies. Until this point, s. 25(2.1) of the Human Rights Code (the “Code”), in conjunction with certain provisions of the Employment Standards Act, 2000 (the “ESA”), has allowed employers to terminate an employee’s benefits when they reach the age of 65. In Talos v. Grand Erie District School Board, 2018 HRTO 680 (“Talos”) the Tribunal held that an employer could not rely upon s. 25(2.1) of the Code to deny benefits under a workplace benefit policy to employees age 65 and over, as the provision was an infringement of the Canadian Charter of Rights and Freedoms (the “Charter”). While the legislation remains intact, employers will no longer be able to rely upon s. 25(2.1) as a defence to a claim of age discrimination before the Tribunal.

Talos was an interim decision that addressed the availability of s. 25(2.1) as a defence to the applicant’s age discrimination claim. The applicant, George Talos (“Mr. Talos”), was a teacher for the Grand Erie District School Board (the “School Board”). His extended health, dental and life insurance benefits were terminated when he reached age 65 although he continued to work on a full time basis. Mr. Talos and his family were greatly affected by the termination of his benefits, as his wife was suffering from a serious illness that required ongoing medical treatment. Mr. Talos filed an application before the Tribunal seeking compensation for the lost benefits and general damages for age discrimination. The School Board sought to rely on s. 25(2.1) as a complete defence to Mr. Talos’ allegation of discrimination. Mr. Talos alleged that s. 25(2.1) should not be available as a defence because the provision infringed his equality rights under s. 15 of the Charter.

The Tribunal first considered whether s. 25(2.1) infringed s. 15 of the Charter, applying the two-part test from the Supreme Court of Canada decision in Kahkewistahaw First Nation v. Taypotat, [2015] 2 S.C.R. 548. The test states that to find an infringement, a party must show:

1. the law creates a distinction based on an enumerated or analogous ground; and
2. the impugned law fails to respond to the actual capacities and needs of the members of the group and instead imposes burdens or denies benefits in a manner that has the effect of reinforcing, perpetuating or exacerbating their disadvantage.

The Tribunal found that s. 25(2.1) infringed upon s. 15 of the Charter. Applying the first prong of the test, the Tribunal found that the provision distinguished between workers under the age of 65 who are members of workplace group benefits plans, and those who are 65 and older who perform the same work but are not entitled to benefits. Under the second prong, the Tribunal found that s. 25(2.1) creates a disadvantage for employees 65 and over with respect to their health, financial and job security. The Tribunal also found that s. 25(2.1) had the effect of reinforcing unfitting stereotypes that employees 65 and over are less deserving of compensation and equality protections than younger workers.

Having found a breach of s. 15, the Tribunal then considered whether s. 25(2.1) could be saved as a reasonable limit under s. 1 of the Charter. To determine this, the Tribunal applied the Supreme Court test from R. v. Oakes, [1986] 1 S.C.R. 103, which requires that a party seeking to uphold a reasonable limit of a Charter right must show:

1. the impugned statute seeks to achieve a pressing and substantial objective; and
2. the means adopted to obtain this objective are proportional, which is analyzed in three elements:
   1. rational connection - is there a rational connection between the distinction made by the law and the state’s objective?
   2. minimal impairment – can the legislative goal be achieved in a way that is less harmful to the affected Charter rights?
   3. proportionality – are the detrimental effects of the law on the equality rights of the group proportionate to the legislative objective?

Under the first prong, the Tribunal found that the legislative objective of s. 25(2.1) was to preserve the financial viability of workplace benefits plans after the Code was amended in 2006 to prohibit mandatory retirement for employees age 65 and over. This was a pressing and substantial objective under the test.

Under the second prong, the proportionality test, the Tribunal found that s. 25(2.1) was rationally connected to the legislative objective, but ultimately failed at the minimal impairment stage. The Tribunal found that s. 25(2.1)  had been enacted on the assumption that the abolition of mandatory retirement would affect employers’ ability to maintain financially viable benefit plans for their employees. Relying on expert reports, the Tribunal found that there was now empirical actuarial evidence that benefits plans could be maintained for employees well beyond age 65 without financial hardship. Accordingly, the Tribunal found that there were less impairing means by which the legislative objective could be achieved, namely permitting employers to provide lesser benefits to employees aged 65 or older where there is actuarial evidence to support the age-based differentiation, as is currently allowed under the ESA regulations for all other age-based differentiations in benefit coverage.

The Tribunal found that s. 25(2.1) infringed the s. 15 Charter rights of Mr. Talos and other employees over the age of 65 and could not be saved as a reasonable limit under s. 1. Therefore, the School Board could not rely upon s. 25(2.1) as a defence to Mr. Talos’ claim of age discrimination.

Final Thoughts

The Talos decision effectively renders s. 25(2.1) of the Code a nullity before the Tribunal. While the provision has not been struck down and remains the law in Ontario, employers will not be permitted to use 25(2.1) as a defence before the Tribunal. In its decision, the Tribunal made clear that the decision did not address long term disability insurance, pension plans and superannuation funds. However, with respect to all other benefits, employers now need to consider whether to avoid broad “carve-out” exemptions for employees age 65 and over, and instead differentiate benefit coverage based of actuarial evidence, which is the standard permitted for all employees under the ESA regulations.