Terminating Benefits at 65 Now Illegal

Group Benefits at 65 & The Charter

In a significant decision that will impact employers across Ontario who have a group benefits plan for their employees, the Ontario Human Rights Tribunal has declared that group plans which purport to reduce or terminate coverage for employees when they reach 65 years of age is contrary to the Canadian Charter of Rights and Freedoms (“Charter”).

In 2006, the Ontario Human Rights Code (“Code”) was amended to effectively eliminate an employer’s right to force employees to retire at age 65. However, section 25(2.1) of the Code, when read in conjunction with the Employment Standards Act, 2000, permitted employers to terminate employee benefits at 65 even if employees continued working beyond that age.

In the case of Talos v. Grand Erie District School Board https://www.canlii.org/en/on/onhrt/doc/2018/2018hrto680/2018hrto680.html?resultIndex=8], Mr. Talos, a high school teacher, sought to challenge the constitutionality of section 25(2.1) of the Code, after his extended health and life insurance group benefits terminated upon reaching age 65, even though he continued to work on a full-time basis. Specifically, Mr. Talos argued that section 25(2.1) of the Code breached section 15 of the Charter, which states that every individual has the right to equal protection and benefit of the law without discrimination based on, amongst other things, age. The school board sought to rely on section 25(2.1) as a defence to Mr. Talos’ allegation of discrimination.

The Human Rights Tribunal found that section 25(2.1) of the Code breached the Charter because it created a distinction between employees who were 65+, and those who were 64 and under, and Mr. Talos consequently suffered a disadvantage due to his age. The Tribunal went on to say that this age-based disadvantage was not justified because this age distinction was not necessary in order to ensure benefits plans remained financially viable. The Tribunal found that there was a lack of empirical evidence to support the argument that the cost to provide benefits to insurers was significantly higher once an individual reached 65. The Tribunal further pointed out that such benefits plans continued to remain viable in places like Quebec and Manitoba, where plans were no longer permitted to terminate benefits after age 65.

How Does This Impact On Employers:
Notwithstanding the Tribunal’s decision, section 25(2.1) of the Code remains in force and this will not be the final answer on this issue, as future litigation will likely ensue. In the interim however, employers would be wise to review their current benefits plan and work with their insurance providers to see if the age-65 cut-off can be eliminated. At the same time, employers should investigate whether actual evidence exists to show that benefit plans are no longer financially viable after employees reach a certain age.

We will provide additional information on this important issue once new developments arise.

If you have any questions relating to this article or wish to discuss your particular concerns, you may reach the author at nbhandal@kmblaw.com or (905) 276-0408.