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Supreme Court of Canada to rule on expanding reach of mandatory retirement

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Should individuals who are not technically “employees” be afforded the same protections as employees, even though they are self-employed? The recent decision of the Supreme Court of Canada to grant leave to appeal from the British Columbia Court of Appeal’s decision in McCormick v. Fasken Martineau DuMoulin LLP, 2012 BCCA 313 will tackle just how broadly human rights protection should be extended, particularly with respect to mandatory retirement.

Mr. McCormick was a lawyer who was asked to resign as a partner from his law firm upon turning 65, since mandatory retirement at age 65 was a term of the partnership agreement he had signed with the firm. Mr. McCormick had dedicated most of his professional life to the firm. He brought a human rights complaint on the basis that the requirement that he resign at age 65 was a form of age discrimination. Currently, in Canada, mandatory retirement is unlawful and is protected by provincial human rights legislation.

The firm sought to quash the application by stating that Mr. McCormick was not an employee, and his arrangement with the firm was not within the scope of the Human Rights Tribunal. The B.C. Human Rights Tribunal disagreed, holding that it had jurisdiction to hear the dispute. Even as an individual equity partner, the Tribunal found that Mr. McCormick had very little control over his work life, remuneration and work product and, therefore, could be viewed as an employee. The Tribunal held that human rights principles “should not be determined by reference to narrow legal principles” such as those provided by partnership and contract law.

On the firm’s application for judicial review, the B.C. Supreme Court essentially upheld the Tribunal’s finding that it had jurisdiction under the B.C. Human Rights Code to hear the complaint.

A unanimous Court of Appeal disagreed, however, finding that even though the Human Rights Code deserves a “broad, liberal, and purposive interpretation”, the language of the Partnership Act is clear, and that, “a partnership is not a separate entity from its partners, and a partner cannot be an employee of, or employed by, a partnership of which he is a member.” Writing for the court, Madam Justice Levine stated that: “the inevitable conclusion of this analysis is that there is no employment relationship between the firm and McCormick; his complaint is not within the jurisdiction of the Tribunal”.

Should the Supreme Court of Canada decide to overturn the B.C. Court of Appeal’s decision, it will have substantial impact on how many businesses operate especially those where regulated professionals are providing services. I am referring to accountants, architects, and others. Should employers not be able to impose a mandatory retirement policy, older generations of workers may be able to stay longer at their position, leaving the younger, millennial generation with limited prospects. In a tough economic climate, the tension between generations is more pronounced. With more and more millennials accepting internships, unpaid or contract work, often with long hours and little pay, the possibility of older generations staying put in their roles, means long-term uncertainty for the younger workforce.

The Supreme Court’s decision could also mean increased obligations for employers, who may have to ensure that they accommodate the needs, benefits and costs of their aging workforce, instead of instituting retirement packages.

Should the Tribunal’s original decision be upheld by the Supreme Court, employers will also need to consider whether the arrangements they have with individuals, who they may not regard as employees, could nevertheless be subject to human rights legislation.

We, and I imagine many younger and older employees as well as employers across the nation, eagerly await the Supreme Court’s ruling on this issue.

Marie-Helene Mayer