Mandatory Retirement Proper In Some Circumstances -- Supreme Court of Canada

New Brunswick (Human Rights Commission) v. Potash Corporation of Saskatchewan Inc., 2008 SCC 45, released today, continues the Supreme Court's surprising re-evaluation of employment law.

Melrose Scott, a former miner with the Potash Corporation of Saskatchewan, wanted to stay with the company beyond its mandatory retirement age so he could top up his pension. The company said no, and on Friday, the Supreme Court agreed with that decision. Mandatory retirement laws were struck from New Brunswick's books in 1973, but some exceptions continue to apply, including those related to pension plan contracts or collective agreements. The SCC determined the Potash Corporation made the pension agreement in good faith and not from a position of age discrimination. As a result the mandatory retirement was proper.

Under the provincial Human Rights Code, the age discrimination provisions are expressly declared not to be applicable under s. 3(6)(a) if the employee is terminated pursuant to a “bona fide pension plan”. A Board of Inquiry was asked what constitutes a bona fide pension plan within the meaning of s. 3(6)(a) of the Code. The Board concluded that, once a prima facie case of age discrimination has been made out, the employer had to satisfy the three‑part “bona fide occupational requirement” test from British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 S.C.R. 3 (“Meiorin”).

On judicial review, the Court of Queen’s Bench set aside the Board’s decision and applied a different test, indicating that the pension plan must be both bona fide and reasonable. The Court of Appeal dismissed the employee’s appeal and allowed the employer’s cross‑appeal. It concluded that, under s. 3(6)(a), the applicable test was whether the plan was subjectively and objectively bona fide. The Supreme Court agreed.

The three‑part Meiorin test is applicable to s. 3(5) of the New Brunswick Human Rights Code, which deals with bona fide occupational qualifications, but does not apply to s. 3(6)(a) of the Code, which addresses “bona fide” retirement or pension plans.

The words “bona fide” in s. 3(6)(a) are used to qualify a different provision in a different context. When used with “occupational qualification” or similar expressions, “bona fide” is a well‑understood and accepted term of art in human rights law, but pensions have been treated differently in most human rights codes because they arose from different protective concerns. In enacting s. 3(6)(a), the legislature was seeking to confirm the financial protection available to employees under a genuine pension plan while ensuring that they were not arbitrarily deprived of their employment rights pursuant to a sham. If both ss. 3(5) and 3(6)(a) anticipated the same analysis, s. 3(6)(a) would be redundant.

To meet the bona fide requirement in s. 3(6)(a), a pension plan must be subjectively and objectively bona fide: it must be a legitimate plan, adopted in good faith and not for the purpose of defeating protected rights. The inquiry is into the overall bona fides of the plan, not the actuarial details or mechanics of the terms and conditions of the plan.

Registration under the New Brunswick Pension Benefits Act is at least one helpful indication of the bona fides of a pension plan. Accordingly, unless there is evidence that the pension plan as a whole is not legitimate, it will be protected by s. 3(6)(a) from the conclusion that a particular provision compelling retirement at a certain age constitutes age discrimination.

The Court held:

[41] In my view, for a pension plan to be found to be “bona fide” within the meaning of s. 3(6)(a), it must be a legitimate plan, adopted in good faith and not for the purpose of defeating protected rights.