Age 65 Cut-Off for Long-Term Disability Benefits Coverage Not a Charter Violation

September 19, 2022

Written By Jordan Fremont, Amanda McLachlan and Jaspreet Kaur

In Rayonier v Unifor, Locals 256 and 89 arbitrator Paula Knopf dismissed a union policy grievance which alleged that an age 65 cut-off for long-term disability (LTD) benefits coverage under the parties' collective bargaining agreement (CBA) was in violation of the Canadian Charter of Rights and Freedoms (Charter). For reasons specific to the language in the CBA, arbitrator Knopf separately upheld a union policy grievance that the CBA required the continuation of life insurance, without reduction, beyond the attainment of age 65. On both issues the arbitrator's decision turned in large part on the specific circumstances in this case, but the decision is a helpful reminder to employers to be mindful of best practices and the interplay between CBA and benefits policy language, and more broadly the potential for Charter-based claims respecting differential treatment under benefits plans, particularly for employees in Ontario. 

LTD Benefits

In dismissing the union's LTD grievance, arbitrator Knopf considered relevant provisions of the Ontario Human Rights Code (Code), which protects every person’s right to equal treatment with respect to employment without discrimination on the basis of age (among other enumerated grounds), exceptions to the Code's protections for benefit plans that comply with the Employment Standards Act, 2000 (ESA) and section 8 of the ESA's Regulation 286/01 (that specifically permits age differentiation with respect to short and long-term disability plans). The union argued that these “carve outs” under the Code (with reference to the ESA) could not be applied to the age 65 limitation applicable to LTD benefits coverage under the CBA at issue because the Charter has primacy over the Code and ESA, and guarantees protection and equal benefits of the law without discrimination based on age, with no age limit specified. In other words, it was asserted that the statutory carve-outs in the provincial Code (with reference to the ESA) were not consistent with the guarantees under section 15 of the Charter and therefore unenforceable in this case. Arbitrator Knopf agreed that the age 65 cut-off for LTD coverage amounted to prima facie discrimination, and was contrary to the equality protections under subsection 15(1) of the Charter, but concluded that the limitation was, on the specific facts in this case, justifiable and reasonable and therefore saved by section 1 of the Charter. In making this determination, arbitrator Knopf referred to the prior decision of arbitrator Etherington in Chatham-Kent (Municipality) v. Ontario (Attorney General)¹ and the conclusion reached in that case that differential treatment with respect to participation in benefit and group insurance plans can be a reasonable limit on equality rights.

On the facts of this case, arbitrator Knopf determined that the age limit on LTD coverage was reasonable and demonstrably justifiable, within the meaning of section 1 of the Charter, for the particular workplace at issue. In support of this conclusion, arbitrator Knopf noted that:

• Age 65 is greater than or coincides with the point when employees could access unreduced government benefits and unreduced workplace pensions, and is older than the average age of retirement in this specific workplace (which was identified as very physically demanding).
• The cut-off of LTD at age 65 created no significant disadvantage to these employees and was the result of free collective bargaining, and not of stereotyping or prejudicial treatment.
• The cost of extending LTD coverage for employees older than age 65 could impact the balance of interests achieved by the parties in their complex collective bargaining process, (a constitutionally protected process that should not be intruded upon lightly). Given the evidence that only a small number of bargaining unit members had historically worked past their 65th birthday, it was reasonable to allocate resources in the ways chosen by the parties.

Arbitrator Knopf further distinguished the decision of the Ontario Human Rights Tribunal in Talos v. Grand Erie District School Board, which concerned the loss of health and welfare (not LTD) benefits. In Talos, the Tribunal determined that Mr. Talos was deprived of health and welfare benefits at age 65 without any viable alternatives, which it found he needed due to his family's personal circumstances. In contrast to the facts in Talos, arbitrator Knopf pointed to the pension and other benefits available to Rayonier employees after the attainment of age 65, which she found were important contextual factors distinguishing this case from Talos.

Life Insurance

Unlike the LTD benefits issue, the union's life insurance grievance turned on the specific language of the CBA, which arbitrator Knopf determined did not clearly provide for the cessation or reduction to life insurance at or after employees attained the age of 65. For example, while a life insurance policy providing for reduced coverage after age 65 had been in place for many years, arbitrator Knopf held that the reduction was not previously widely understood or known by union officials. In light of this, arbitrator Knopf held that it would be inequitable for the union to be prevented from relying on the language of the CBA. 

As the employer's life insurance policy did not provided for coverage after the age of 65, the result of this decision was that the employer would have been directly responsible for any related claims.

Key Takeaways

Arbitrator Knopf's decision in Rayonier that an age 65 limitation on LTD coverage under the applicable CBA can be considered justifiable and reasonable and therefore saved by section 1 of the Charter will be of some comfort to employers that have adopted similar policies or practices.

However, employers should be mindful that the analysis undertaken was fact-specific, and that age-based limitations imposed in other workplaces may not similarly pass Charter scrutiny. It is possible, for example, that the Rayonier case might have been decided differently if the company had not provided employees with access to other income supports (i.e., a generous workplace pension) or health and welfare benefits coverage after age 65 or if employees in the workplace commonly worked past age 65. Employers should assess any Charter risk associated with age limits on the provision of LTD and other benefits coverage based on their own circumstances, including the availability of other income/benefits supports for employees as well as their workplace demographics.

The decision is also noteworthy for employers as it highlights the importance of adopting clear language in collective agreements that reflect the true and current intention of the bargaining parties. Employers should also seek to clearly and regularly communicate employee benefits and entitlements, including related limitations, as a way to enhance awareness and mitigate against the risk of misunderstandings and related claims.

If you have any questions concerning this decision and/or the differential treatment of employees under benefits plans for age related or other reasons, please contact the Bennett Jones Employment Services group.

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