As of July 1st, mandatory retirement in Nova Scotia became of policy of the past, not of the future. Forcing an employee to retire by reason of age is now regulated by human rights legislation. This amendment to the Human Rights Act brings Nova Scotia in line with all other jurisdictions in Canada which have already legislated away the mandatory retirement.
The notion of mandatory retirement came about for a number of reasons: as a means to move older workers out of an organization and offer younger workers promotional opportunities and thereby engage younger workers; to unload experienced workers who are at the peak of their earnings thereby allowing the companies, in some cases, to hire two young workers for the price of one older worker; for times when the workforce expanded at a faster pace than that of job creations; and, as a matter of public policy, mandatory retirement was good for unemployment statistics.
Unfortunately, mandatory retirement was not a good solution for many people. For example, low-paid workers often have insufficient savings for retirement at 65. This is particularly true for women, who typically have earned less then men during their career years and who, moreover, generally outlive men and thus need to have larger pensions in order to support themselves. Then there are those individuals who are both educated and also highly committed to their work. This group, who often can financially afford to retire, stay employed because employment is an essential component of their sense of identity, self-worth and emotional well-being.
Having said this, as noted by CBC in February 2008, the facts are that only six per cent of workers continue to work full-time after age 65 and the average retirement age in Canada is 62…
So, what does this change in legislation mean to Nova Scotians?
The new legislation is not retroactive and no employee forced to retire before July 1, 2009 can seek any legal remedy against their former employer.
Employees who choose to retire before age 65 cannot be penalized.
Employers can continue to use early retirement packages as an incentive to promote voluntary exit from the workplace.
The provision of benefits (disability plans, life insurance plans, and health benefit plans) to workers aged 65 and older will continue to be at the employer’s discretion.
Existing pension rights are protected. Bona fide retirement, superannuation or pension plans will continue to be able to make distinctions on the basis of age, as they do now.
There still exists a “bona fide occupational requirement” provision under the legislation which exempts employers from continuing to employing workers who can no longer perform the duties of the position because of age and who cannot accommodate the older employee without imposing undue hardship upon the employer.
So, why continue to employ employees post 65? As per private businesses, the facts remain that the workforce is shrinking and businesses need the vital experience, smarts and connections of older workers. From a public policy point-of-view, the number of workers in Canada for every retired person is expected to fall to two in 2031, from five in the 1980s. Concomitantly, because people live so much longer, and retire so much earlier, there will be increased pressure on public pensions. Demands to raise CPP contributions are expected in coming years.
Should you have any questions around the change in the Human Rights Act please contact HR pros.