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Ending Mandatory Retirement: How Will It Affect You?

How our views on retirement have changed over the years! Our grandparents worked hard all their lives and then retired to their rocking chairs to dandle grandchildren on their knees. The baby boomers touted the advantages of “Freedom 55” – many took advantage, but are now re-thinking that thanks to the dual blessings of longer lives and better health. Generation X seems to have the fatalistic view of “Freedom 75”…if they are lucky (unless they lucked out in the tech boom!). No matter what your outlook, the recent introduction of legislation by the McGuinty government to end mandatory retirement in Ontario brought home the fact that the face of our workforce is about to change drastically.

According to Statistics Canada, the number of Canadians over the age of 65 is expected to double from nearly four million in the year 2000 to over eight million by 2028, at which time seniors will account for approximately 22% of Canada’s population. What does this mean for us as HR professionals? A group of local experts gathered at the Sheraton Hotel in downtown Ottawa to discuss the implications of this shift in legislation and population.

Included on the panel were Lynn Harnden of Emond Harnden, a noted specialist in employment law, Brian Pascal, President of IPM, Kathryn Butler Malette, Vice President of HR for Canadian Blood Services, and Jacky Evans and Pascal Longpre of Mercer Human Resources Consulting in Ottawa.

Lynn Harnden gave the group a review of the legal principles involved in both union and non-union settings. Mr. Harnden raised some very interesting points:

  • While forcing someone to retire at age 65 is now considered discrimination, companies can still end benefit coverage for these employees, creating a group of employees whose terms and conditions of employments would be different;
  • It is also still legal for pension plans to have pension benefits commence at age 65, essentially penalizing members who wish to continue working;
  • Companies may have employees of up to (and possibly beyond) 75 years of age, a time when people may experience some deterioration in their faculties; this may cause challenges in evaluating performance and terminating for just cause.

    Jacky Evans and Pascal Longpre of Mercer Human Resources addressed issues relating to group benefit and pension plans. Some of the barriers that employers can expect to encounter when members of their workplace pass the age of 65 include:

  • Life insurance contracts that reduce the level of coverage after age 65 and terminate or provide a flat amount at age 70;
  • Long-term disability benefits terminate at age 65, the rationale being that lost income is replaced through pension plan and social security benefits;
  • Health and dental coverage usually terminates at age 70 for active employees; coverage can be continued through post-retirement coverage.

    The purpose of these age restrictions is to ensure that employers can continue to offer benefits, but that the cost of providing these benefits to older workers doesn’t become prohibitive. Their advice to employers is to be aware of the current age restrictions in their group benefit contracts.

    With respect to pension plans, employers may want to revisit the design of their plans. Due to the expected labour shortage once baby boomers start retiring, it may be necessary to work to retain your skilled and experienced workers. Conversely, you may also need a way to encourage certain employees to retire. The challenge lies in designing a plan to retain the older worker as almost all design initiatives in the past 30 years have focused on early retirement incentives.

    Kathryn Butler Malette added the dimension of HR strategy and planning to the session. As she pointed out, globally we are moving from a “buyer’s” labour market where there were more good employees than good jobs to a “seller’s” market, in what will become the tightest labour market since the 1950’s. She urged the group to consider that, while many employees may not wish to retire at age 65, many will, leaving a huge skill gap in their wake. What plans are in place in the organization – for succession, retention, skill development and knowledge transfer? These are the critical issues that organizations need to be looking at today so they are not caught short down the road.

    Finally, Brian Pascal wrapped up the presentation portion by looking at recent history and asking what we have learned from it. During the massive layoffs in the late 80’s and early 90’s, many organizations cut loose the older workers who had massive organizational memory and knowledge, leaving behind the more adaptable employees with the more fluid skills sets. The result: A huge rate of failure among these businesses. The question remains – did we learn about the vital importance of knowledge transfer from that experience?

    The session wrapped up with a lively question and answer session, and participants left with a better understanding of the rationale for the change, the outlook in terms of employment trends and practices and a comprehensive perspective on these issues.

    Today’s Hottest Issues in Employment Law

    Richard Nixon, partner in the Labour and Employment Group with McCarthy Tétrault in Toronto, presented a timely and interesting session updating a workshop of over 50 people on employment law.

    Mr. Nixon covered a wide variety of topics, including what is happening with privacy legislation now that most companies have implemented their new policies, updates to the Limitations Act and the ever-popular discussion around problems with employment contracts.

    Ontario’s proposed Labour Law Amendments (Bill 144) were discussed; this is a truly important topic, as passage of this Bill would grant the Ontario Labour Relations Board the power to automatically (or remedially) certify a union upon a finding of an unfair labour practice, even where the union lacks the support of the majority of employees. This Bill also repeals the current requirement that employers post in the workplace, and distribute annually, information about the decertification requirements and process under the Ontario Labour Relations Act.

    The end of mandatory retirement in Ontario was another timely issue discussed in detail at this workshop, as the McGuinty government had just announced its intent to introduce the legislation the day before Mr. Nixon was due to speak. Finally, Mr. Nixon also touched on the subject of wrongful dismissal and “Wallace damages”, illustrating the topic with some of the recent decisions in Ontario.

    Following the presentation, Mr. Nixon invited the group to ask questions. The end of mandatory retirement in Ontario was of particular interest, stirring up a lot of questions and discussion. His dynamic presentation style and thorough knowledge of the topics at hand were very well received by the group.

    Back by popular demand, Richard Nixon of McCarthy Tétrault will be presenting at the half day workshop in Toronto on May 10, 2005. Check for details!

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