Voluntary Retirement in Canada

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When Old Age Social Security (OAS) was first introduced in 1952, it was available for people ages 70 and older. At the time, the average life expectancy for Canadians was about 75 years.

Today, Canadians are eligible for Old Age Security at 65. Thanks to advances in modern medicine, healthy diets and good physical health, Canadians are living longer than ever and the average life expectancy is now 82 years.

Given this information and compound it with the fact that an OAS pension is less than $1,000 a month, the economic squeeze many have felt since the Great Recession of 2008 and the abolition of mandatory retirement in 2006 and it is probably little surprise that many Canadians are choosing to work past the age of 65.

However, older workers choosing to work past their ‘normal’ retirement age can present a dilemma for employers who may wish to make room for new talent, reduce costs, downsize or restructure their operations.

Employers may wonder what their options are if they are hoping to encourage an older worker to retire early.

Most importantly – for both moral and legal reasons – for any employer in such a situation is to avoid discriminating on the basis of age. Age is a protected ground under the Canadian Human Rights Code.

The Human Rights Tribunal (HRT) has weighed in on whether or not offering an older employee an incentive to retire early is, in and of itself, age discrimination. On this point, the HRT has said that simply making an early retirement incentive available to older workers does not constitute age discrimination. However, exerting any pressure, however subtle or positively-framed, on an older employee to accept such an offer is considered age discrimination and can be particularly costly to employers if litigated.

The 2018 case of Dawe v. Equitable Life Insurance Company illustrates just how much can be at stake for employers who pressure older workers to retire. In this case, Mr. Dawe was 62 and had been terminated, despite his wishes to continue working, from his position with the company as Senior Vice President. At trial, Mr. Dawe was awarded an astounding 30 months notice. The judge explained that the termination essentially amounted to a forced retirement since Mr. Dawe, given his age and seniority, could not reasonably expect to find a comparable job opportunity. Furthermore, the judge emphasized that Mr. Dawe should have been allowed to retire from Equitable Life on his own terms.

Best Practices when offering an early retirement incentive

First and foremost, retirement must be voluntary. This means that, as an employer, you can offer an older employee something like a severance package with the hope that they will take it. However, you cannot under any circumstances encourage, coerce or pressure them to accept it. This includes doing things such as talking about the merits of retirement, your desire to give younger employees a chance to grow or suggesting that the older employee is in any way unvalued. You must be mindful to communicate your offer as neutrally as possible. This means limiting your discussion to the details of the offer and the employee’s eligibility for it. Anything more could be construed as age discrimination.

Everyone wants to retire with dignity and grace and your desire to transition an older employee out of your workplace should not impede them from doing just that. The employment law team at KCY at LAW can help you navigate the delicate process of offering an employee an early retirement incentive in a way that is respectful and legal.

Call us at 905-639-0999 or click here to book your consultation.

Retraining and the Duty to Mitigate

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As you probably already know, employees who are wrongfully dismissed are entitled to damages in lieu of notice. However, these damages are not intended as a blank cheque for an employee to kick back, relax and do as they please. They are intended to give the dismissed employee the time and resources they need to secure a new job. Therefore, employees have what is called a duty to mitigate the damages incurred by their former employer by their termination.

What it means to mitigate

The duty to mitigate, in its most basic sense, requires an employee who has been wrongfully dismissed, to make reasonable efforts to find new employment. This means taking realistic, positive steps towards obtaining new employment that is comparable in status and compensation to the job from which they were terminated.

The duty to mitigate is intended to offset a former employer’s termination payments under the belief that an their liability is limited to their former employee’s ability to obtain alternate work. (For more information about the scope and character of this duty click here.)

If a wrongfully terminated employee fails to mitigate their damages, a court may order their damages to be reduced or even eliminated altogether. However, the onus to prove that a former employee has failed to mitigate their damages rests with their employer.

To do so, the employer must demonstrate:

  1. that the employee did not take reasonable steps to find comparable new employment; and
  2. that the employee could have found a comparable position with similar compensation if they had made a reasonable effort to do so.

Retraining and the Duty to Mitigate

So how does retraining factor into a terminated employee’s duty to mitigate? Can a dismissed employee pursue training or other educational upgrades to help them find new employment while still honouring their duty to mitigate their employer’s damages?

While there are certain circumstances in which pursuing retraining may be considered a reasonable effort to mitigate damages, specifically if an employee is unable to secure comparable employment after making reasonable efforts to do so, pursuing retraining doesn’t generally amount to mitigating damages.

The 2017 case of Benjamin v Cascades Canada ULC offers a clear example of the limits of retraining as it pertains to an employee’s duty to mitigate damages.

In this case, Mr. Benjamin, along with dozens of other employees, was terminated without cause from his position as an unskilled general labourer with Cascades Tissue Group. Mr. Benjamin had worked for Cascades for 28 years and was offered 50 weeks severance, which he refused. Instead, he was given his statutory entitlements under the ESA (eight months’ salary).

Part of Mr. Benjamin’s separation package included access to job search coaching, counselling, and updates of comparable job opportunities with Cascades and other employers. However, instead of pursuing any of these opportunities, Mr. Benjamin decided to retrain as a welder and launched a wrongful dismissal action for two years’ pay in lieu of notice. In response, Cascades argued that, by failing to apply to the job opportunities that had been forwarded to him, he had failed to mitigate his damages. The Court agreed and dismissed Mr. Benjamin’s claim.

Mr. Benjamin’s case highlights the parameters in which an employee can pursue training while still upholding their duty to mitigate. Pursuing retraining or further education is considered a failure to mitigate if the employer can demonstrate that the former employee chose to retrain instead of pursuing available comparable work, as was the case with Mr. Benjamin.

In short, you cannot use your damages for wrongful termination as an opportunity to change careers or seek advancement on your former employer’s dime. Employees must make reasonable attempts at comparable employment before pursuing retraining if retraining is to be considered upholding their duty to mitigate.

The employment law team at KCY at LAW can help employers with all issues that may arise when dismissing an employee. Click here to book your consultation.

Are managers entitled to overtime pay?

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As we’ve explored in a previous post, most workers are entitled overtime pay at time-and-a-half of their regular wage after working 44 hours in a single work week. This applies to both workers who are paid a salary and those who receive an hourly wage.

However, not all employees are entitled to overtime. In fact, for a surprising number of workers overtime pay is not a statutory entitlement.

Lawyers, healthcare and IT professionals, teachers and engineers are, among others, professions that are exempt from employment legislation regarding overtime pay. Furthermore, most managers and supervisors are also not entitled to overtime pay.

We say ‘most’ managers and supervisors are not entitled to overtime pay because not everyone with ‘manager’ or ‘supervisor’ in their job title does work that fits this description.

To qualify as a ‘manager’ or ‘supervisor’ for the purpose of overtime pay, the work they do must be predominantly managerial or supervisory. Non-managerial tasks must only be performed on an irregular basis.

Generally speaking, managers and supervisors are not entitled to overtime pay unless they spend over 50% of their time doing non-managerial work. For example, if you are the bar manager at a restaurant and the majority of your work is bartending, you may be entitled to overtime pay once you have worked more than 44 hours in a week. But, if by contrast, your time working as a bar manager is primarily spent managing the day to day tasks of scheduling workers, ordering supplies, resolving conflicts and organizing operations, you would likely not be entitled to overtime pay for working more than 44 hours. However, if a bar manager who normally spends most of their working hours doing managerial work must suddenly cover a shift for a regular employee in addition to their managerial duties, they be entitled to overtime pay for the extra hours they work doing the non-managerial tasks.

Takeaway for employers

Calling someone a manager or a supervisor does not necessarily make it so. Do not assume that just because your employee is called a manager that they are not ever entitled to overtime pay. Calling someone a manager just to avoid overtime compensation is not acceptable. The nature of their work is what entitles them to overtime, not their official job title.

Call KCY at LAW today at 905-639-0999 or connect with us online by filling out a consultation request form.