Forced Retirement

Here is a fairly common situation. An employee who is approaching his 65th birthday is told that he must retire in the month during which he turns 65. The employee is taken aback at this. He had not considered retiring when he was 65. Instead of dealing with the situation head-on the employer has subtle conversations with the employee, asking him if he had thought about retirement or telling him that he "they had heard" he was considering retirement. Or sometimes an employee will merely inquire about his pension funds and the employer will use that as justification for presuming the employee intends to retire.

The issue in these cases is whether the employee agreed at the commencement of employment or even during employment, to mandatory retirement at age 65. The basic premise at common law is that whatever terms and conditions of employment were agreed to at the commencement of employment, is what governs. Further, with some exceptions, terms and conditions of employment that are introduced after the commencement of employment are generally held not to be enforceable unless the employee specifically agrees with them.

Employers sometimes consider the older employee a problem. They have often been employed for a very long and usually on a mere hand-shake. Many employers did not have retirement policies 30 years ago but now wish to enforce retirement. If the employee is forced out the door after 30 years of employment based on the premise of a retirement policy they never agreed to, the employer is at risk of paying a large severance packages unless they can show that the employee actually agreed to mandatory retirement.

A case on point is McLaren v. Pacific Coast Savings Credit Union [2001] B.C.J. No. 118 (B.C.C.A.), a decision of the British Columbia Court of Appeal. Notwithstanding that the decision is from British Columbia (a jurisdiction known to be excessive in its awards to employees), this is a case that can be used in Ontario. McLaren stands for the proposition that an employer cannot rely upon a retirement policy that was not part of the terms of employment when it commenced. In that case, the plaintiff had made express declarations before his 65th birthday that he intended on retiring on that date. Then the company made a general announcement that at its discretion the retirement age could be extended. McLaren then decided in his own mind that he wanted to work past his 65th birthday. He had no discussions about this with his employer. Then, six months before his 65th birthday the company gave McLaren notice that his employment would be terminated on his 65th birthday or he could stay on and work in a lesser position. The court held that the company failed to advise McLaren that its policy would be exercised in his favour. The court held that the company terminated McLaren's employment without just cause and he was awarded pay in lieu of notice. In addition, the court held that McLaren was not required to seek or accept a lower-status position and that he was not required to make any efforts to mitigate his damages.

The case law generally requires that the employee make a clear and voluntary decision to retire and communicate that decision to the company. Further, case law suggests that an employer will not be able to rely upon a mandatory retirement policy that it never drew to the attention of the employee or that the employee did not specifically agree with.

If you have been forced to retire or feel that your employer is trying to get you commit to retirement, please call me to discuss your specific situation.