In-Depth Analysis

Employers’ Advisor September 2018

Articles:

  1. Exception Permitting Termination of Employee Benefits at Age 65 Found Unconstitutional
  2. British Columbia’s Workplace Laws: More Changes Ahead
  3. Pre-Employment Requirement of Permanent Ability to Work in Canada is Discriminatory

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Exception Permitting Termination of Employee Benefits at Age 65 Found Unconstitutional

In a recent decision, the Human Rights Tribunal of Ontario declared that a provision of the Ontario Human Rights Code (the “Code”) which purports to allow employers to terminate benefits for workers over age 65 is unconstitutional.

Legislative Context

The Tribunal’s decision dealt with a statutory exception, set out in section 25(2.1) of the Code, which purports to allow employers to cut off certain types of group health and life insurance benefits at age 65.  The purported effect of this exception, when read in combination with the Employment Standards Act, 2000 (the “ESA”) and its Regulations, is to permit employers to terminate employee benefits at age 65 without violating the right to freedom from discrimination on the basis of age.

The Decision

Talos v Grand Erie District School Board involved a constitutional challenge against section 25(2.1) of the Code.

Wayne (Steve) Talos, a full-time high school teacher, chose to continue to work past age 65.  However, on his 65th birthday, Mr. Talos’ extended health, dental and life insurance group benefits were terminated, as per the terms of the School Board’s benefits plan.

In 2012, Mr. Talos brought an application under the Code alleging that the termination of his benefits constituted age discrimination.

The School Board defended against the application by relying on the exception provided by section 25(2.1), while Mr. Talos argued that the provision violated section 15 of the Charter of Rights and Freedoms (the “Charter”), which prohibits discrimination on the basis of age.

In an interim decision on the constitutional issue, the Tribunal applied the well-established test in the context of a constitutional challenge, which requires 1) an assessment of whether the impugned law constitutes a prima facie violation of the Charter, and 2), if so, whether the violation is reasonable and justifiable and thus can be saved pursuant to section 1 of the Charter.

The Tribunal held that section 25(2.1) created a distinction between workers under the age of 65 and those aged 65 and older, to the disadvantage of those in the latter category, by excluding workers aged 65 and older from the Code’s protections from differential treatment on the basis of age in respect of workplace benefit plans. The Tribunal thus concluded that section 25(2.1) constituted a prima facie violation of the Charter.

The Tribunal next assessed whether section 25(2.1) was a reasonable and justifiable limit on Charter rights.  The Tribunal found that while the provision was rationally connected to the pressing and substantial aim of preserving the financial viability of workplace benefit plans following the abolition of mandatory retirement in 2006, it was not minimally impairing of the rights of workers age 65 or older.  In reaching this decision, the Tribunal emphasized the fact that the actuarial evidence led by the parties did not support that it was cost-prohibitive to provide the group benefits at issue to persons over the age of 65.

Most crucially, the Tribunal concluded that less drastic means were available to achieve the pressing and substantial aim of preserving the financial viability of workplace benefit plans, such as by providing for lesser benefits to those employees over the age of 65.  As a result, the Tribunal held that the infringement could not be justified as a reasonable limit on Charter rights.

The Tribunal does not have the power to issue a general declaration that a provision of the Code is invalid – that power is reserved to the Courts.  As a result, while the Tribunal found that section 25(2.1) was unconstitutional and therefore could not be used by the School Board as a defence to Mr. Talos’ claim of age discrimination, section 25(2.1) is nonetheless still in effect.  It remains to be seen whether the Tribunal will decline to apply section 25(2.1) in future cases involving the termination of benefits.

Employers that provide extended health, dental and life insurance benefits should be aware of this decision because, despite the fact that the legislation itself has not changed, the practical effect of the Tribunal’s decision may be that employers will no longer be able to terminate employee benefits at age 65 without being in violation of their obligations under the Code.  Employers should review their benefits plans and carefully consider whether and how those plans should be amended in order to best account for this new development in the law.

British Columbia’s Workplace Laws: More Changes Ahead

Employers in British Columbia may be noticing that change appears to be the only constant when it comes to the province’s workplace laws. Recent changes to the Employment Standards Act (“ESA”) have included, notably, increases to BC’s minimum wage and unpaid job-protected leaves. And yet, the changes have just begun: The ESA Reform Project Committee has released a report setting out 78 recommendations for future amendments. In separate processes, changes to both the Labour Relations Code and Human Rights Code are also under discussion. In this article, we recap key changes already made to date and forecast future changes that may be yet to come.

Minimum Wage Increases

A schedule of changes has been implemented to bring the minimum wage to $15.20 per hour by 2021. As of June 1, 2018, the general minimum wage in BC is $12.65 per hour. Annual increases are expected on June 1 of each of the next three years, for both the general minimum wage and specific minimum wages for groups such as liquor servers, live-in home support workers, and workers who hand harvest crops.

Changes to Unpaid Leave Periods

Parental leave has been extended to allow birth mothers to begin up to 61 consecutive weeks of parental leave immediately after the end of pregnancy leave, providing a total leave period of 78 weeks. The pregnancy leave period of 17 consecutive weeks has not changed in length, though it now may begin earlier. Non-birth parents and adopting parents are now able to take up to 62 consecutive weeks of parental leave within 18 months of a child’s birth or adoption (previously 37 weeks).

Two new periods of unpaid job protected leave in BC are child death leave (up to two years) and crime-related child disappearance leave (up to 52 weeks). Compassionate care leave has been increased to a 27-week leave period (previously 8 weeks).

Recommended Changes to the ESA

The Committee has recommended changes to the hours of work, overtime, and family responsibility leave provisions of the ESA, among others. While some of these may be welcome changes to employers seeking greater flexibility in how shifts are scheduled, others are likely to cause employers to incur greater costs.

Regarding hours of work, the Committee recommends that the ESA be amended to permit employers to adopt schedules of work that deviate from the standard 8 hours per day for 5 days (such as, for example, a 4-day week of 10 hours per day).

Overtime, on the Committee’s recommendation, would require employers to pay employees at overtime rates for any overtime worked within the pay period, instead of allowing employers to credit overtime with paid time off in lieu. The Committee is also in favour of permitting employees to voluntarily work up to 3 hours of overtime during a pay period (without incurring overtime rates) so that they may take paid time off at a different point within the same pay period.

Other proposed changes include allowing employees to refuse overtime without fear of reprisal (where, for example, the overtime would conflict with the employee’s family commitments) and increasing family responsibility leave from 5 days to 7 days of unpaid leave.

Possible Changes to Human Rights and Labour Relations

The BC government has previously announced its intention to re-establish a Human Rights Commission and consider 25 recommendations for legislative change made by the 2017 public engagement report. Among the recommendations are changes to how the Tribunal handles complaints, including the use of new technology to reduce delay and deliver distance services more effectively, and introducing a “restorative justice” process in appropriate cases such that the parties engage in a discussion of the harms and the impact of the issues outlined in the complaint.

In a separate process, an advisory panel is currently reviewing the BC Labour Relations Code, with a report outlining recommendations early in the fall. Similar processes in Ontario and Alberta have recently resulted in major changes. Updates to the BC Code will be reported here as information becomes available.

Conclusions

For those ESA amendments already in force, employers should review their current policies and practices and ensure they are in compliance with current laws. Employers offering “top-up” benefits for maternity/parental leave may need to review those arrangements in light of the new and lengthier leave periods. Employers may also wish to review current wages, to ensure they are meeting the recent and anticipated increases to minimum wages and staying competitive within their own industry.

Employers should prepare for significant changes down the road. While it is not known which of the recommendations to workplace statutes will be proposed in the Legislature and possibly passed as amendments, it is clear that a number of areas of the employment relationship are likely to be affected. Employers should anticipate the potential need for revisions to internal policies, payroll practices and employment contracts, and should continue to keep abreast of possible changes as they are announced.

Pre-Employment Requirement of Permanent Ability to Work in Canada is Discriminatory

In July 2018, the Human Rights Tribunal of Ontario (the “Tribunal”) expanded human rights protections for temporary foreign workers. In Haseeb v. Imperial Oil Limited, the Tribunal held that it was discriminatory for an employer to require new employees to be Canadian citizens or permanent residents. The Tribunal determined that Imperial Oil’s “permanence requirement” (the ability to work in Canada on a permanent basis) amounted to discrimination based on the ground of citizenship.

Imperial Oil was interviewing candidates for an entry level engineering position in Sarnia, Ontario. The company had a practice throughout its screening process to ask about prospective employees’ ability to work in Canada on a permanent basis. The Applicant, Muhammad Haseeb, was an international engineering student at McGill University and was authorized to work as a student. However, at the time he applied for the job, he did not yet have a post graduate work permit or permanent resident status. Mr. Haseeb lied during the interview process on multiple occasions when asked whether he was able to work in Canada on a permanent basis.

Imperial Oil eventually extended an offer of employment to Mr. Haseeb. It was a condition of acceptance of the offer that he provide Imperial Oil proof of his ability to work in Canada permanently. When he was unable to do so, the job offer was rescinded. In the rescission letter, Mr. Haseeb was invited to reapply for the role if in the future he became eligible to work in Canada permanently. Mr. Haseeb then filed his Application with the Tribunal alleging that Imperial Oil had discriminated against him.

The company argued that the permanence requirement was a bona fide occupational requirement designed to ensure that potential employees will be able to work for an extended period of time with the company. Imperial Oil argued that by hiring an employee with temporary status, it would risk losing its investment costs in training someone who could not necessary work with the organization indefinitely. The company also asserted that it was Mr. Haseeb’s dishonesty during the interview process that led to the job offer being rescinded.

The Tribunal disagreed with the company’s submissions. While the Ontario Human Rights Code does not define “citizenship”, the Tribunal determined that the Code contemplates that discrimination arises where an employer distinguishes among individuals on the basis of either “Canadian citizenship”, “permanent residency” status or “domicile in Canada with intention to obtain citizenship.” As a result of this determination, the Tribunal held that Imperial Oil’s hiring practices and interview screening process of classifying individuals as “eligible” and “ineligible” based on citizenship amounted to direct discrimination (that is, it was a requirement which “on its face” expressly drew unlawful distinctions based on a prohibited ground of discrimination).

The Tribunal also determined the following:

  1. Haseeb’s dishonesty had to be considered in context: he misrepresented his eligibility to work permanently in order not to be categorized as ineligible for the position before his skills and experience were evaluated;
  2. Because this was a case of direct discrimination, the bona fide occupational requirement defence was not available to Imperial Oil and could not justify a total ban on hiring individuals who were not eligible to work in Canada on a permanent basis; and
  3. In any event, the permanency requirement was occasionally waived by the Imperial Oil (by providing offers conditional upon obtaining permanent residency within a few years) for candidates whose skills were in high demand. This undermined the company’s argument that the requirement was bona fide.

What does this mean for employers?

This decision was made in the context of an upward trend in the last decade whereby federal, provincial and territorial governments are strengthening the protection of foreign nationals living and working in Canada. Part of this trend includes heightened scrutiny of employers who hire foreign nationals and increased communication among various government branches tasked with regulating privacy complaints, employment standards, occupational health and safety, human rights and immigration.

In short, employers should revisit their hiring practices and policies to ensure they are not discriminatory. Employers that recruit based on a pre-employment requirement that candidates demonstrate an ability to work in Canada on a permanent basis risk being found liable for discrimination under Ontario’s Code. Given the similarities among the various human rights laws across the country, this decision could also have implications for employers in other provinces.

However, the decision does not mean that employers cannot require proof of eligibility to work in Canada (which could include, for example, a valid work permit, citizenship records or a permanent resident card). An employer is required by law to ensure it only hires foreign workers that are legally authorized to work in Canada. Hiring practices that classify individuals as “eligible” and “ineligible” based on citizenship or permanent residence, however, could result in legal liability.

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This newsletter is not intended as legal advice.  Any employer or organization seeking assistance should feel free to contact the authors, or any Mathews Dinsdale lawyer.

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