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Age-Based Early Retirement Upheld

Written by
Mathews Dinsdale, Canada’s only national labour and employment law firm.
Analysis of decision of the Human Rights Tribunal of Ontario that upheld the validity of an age-based early retirement program

In its recent decision in Kovacs v. Arcelor Mittal Montreal, the Human Rights Tribunal of Ontario (the “Tribunal”) upheld the validity of an age-based early retirement program.

In this case, the employer, Arcelor Mittal Montreal, offered an early retirement program that provided enhanced pension benefits to employees who had 30 or more years of service, were at least age 55 with 15 or more years of service, or were at least age 52 with 25 or more years of service. A 44 year-old employee with 27 years of service alleged that he was discriminated against on the basis of age contrary to the Ontario Human Rights Code (the “Code”) because the sole reason that he did not qualify for the early retirement program was that he was too young.

In a somewhat circuitous ruling, the Tribunal confirmed that the provisions of the early retirement program were not contrary to the Code as they qualified for an exemption to the prohibition on age discrimination for pension and benefit plans that comply with Ontario’s Employment Standards Act, 2000 (the “ESA”).  The ESA, in turn, provides that its prohibition on age discrimination in a benefits plan does not apply to the establishment of normal retirement dates or voluntary early retirement dates under a pension plan where the Pension Benefits Act  (the “PBA”) applies.  The Pension Benefits Act contains minimum standards but does not prohibit early retirement dates.  As a result, the early retirement provisions did not run afoul of the prohibitions against age discrimination. For more information on this decision, please see Heenan Blaikie’s Pension Pulse ” Age-Based Early Retirement Program Upheld”.