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Brief: Strategies needed to deal with retirement issues

|Written By Kirsten McMahon

It’s only been a few months since Ontario joined the ranks of Quebec, Alberta, Manitoba, and Prince Edward Island in abolishing mandatory retirement at age 65.

Employers can impose mandatory retirement if it is a bona fide occupational requirement, but satisfying this test is tough, says Roy Filion.

Prior to the deadline late last year, law firms were holding client seminars, priming in-house counsel on the ins and outs of the Ending Mandatory Retirement Statute Law Amendment Act, 2005, and forecasting what it would all mean for Ontario businesses and law departments.

So it seems the sky hasn’t fallen. While recent statistics suggest most baby boomers (the vanguard of which turn 60 this year) won’t be working past age 65, it doesn’t mean in-house counsel should ignore the issue.

The next few months should be spent working with human resources departments to come up with a clear policy on benefits and detailed performance evaluations, if there isn’t one already, say lawyers working in the area.

Corporate counsel are best advised to have strategies in place for managing retirement and severance issues with, hopefully, positive outcomes.

The act amends the definition of age in the Ontario Human Rights Code to eliminate the former age range of 18 to 65. Now the code defines age “as an age that is 18 years or more.”

There are some cases where an employer can impose a mandatory retirement policy if it is a bona fide occupational requirement, but satisfying this test can be quite difficult, says Roy Filion, managing partner of labour firm Filion Wakely Thorup Angelettie LLP.

Filion, who was on hand at a recent Insight conference for corporate counsel, says, “Employers must be able to prove, through scientific or other objective evidence, that an employee cannot perform the essential duties of the job given his or her particular age even with accommodation short of undue hardship.

“In most workplaces,” he says, “the circumstances in which an employer could meet this test will be limited.”

Although he notes the act continues to allow for the mandatory retirement of judges, masters, case management masters, and justices of the peace pursuant to the Courts of Justice Act.

Filion recommends that corporate counsel work with management to thoroughly audit all policies, procedures, and contracts to ensure they comply with the amended code.

Once that’s in place, performance management should be looked at.

“The importance of employee performance management cannot be overstated,” he says. “Forced retirement is no longer a viable option for employees to resolve poor performance issues.”

The performance management policy for older employees should be the same as it is for any employee. It should include: constructive feedback, setting clear and objective standards, issuing warnings that continued employment may be in jeopardy unless performance improves, and providing a reasonable opportunity for employment.

But there are the cases when - despite having an effective policy - the older employee and the company have to part ways. Rosanne Angotti, chief legal counsel at Kraft Canada Inc., provided the Insight conference with a list of 10 severance strategies. They include:

•    Ensuring the severance offer meets legal standards and obligations. Besides being reviewed by corporate counsel, HR personnel should be trained and be aware of the legal requirements.

•    Have a good severance offer template. Update it often and have clear, easy-to-understand instructions.

•    The termination should not come as a surprise. This should go hand in glove with the performance management policy.

•    The severance offer should be fair and consistent and use the same approach in structure and quantum across the board.

•    Build incentive in the severance offer to get new employment. Consider a lump sum payout at 100 or 50 per cent upon re-employment.

•    Display sensitivity in conducting termination and exit from company.

•    Take adequate account of special circumstances.

•    Make sure you have compelling evidence for just cause.

•    Be reluctant to negotiate.

•    If you get sued, hire the appropriate litigation counsel.

As well, every company should have a succession plan in place. According to a recent Robert Half Legal survey, 53 per cent of lawyers polled said their law firm or legal department did not have a formal succession plan in place for key positions.

Corporate counsel, in conjunction with HR professionals, should take the time to review talent and assess the workforce needs of the future, says Angotti. When coming up with a succession plan, keep it objective and fact-based. For example, keep the plan focused on the actual job requirements and not, say, an individual manager’s preference for hours.

When communicating plans, focus on giving employees probabilities as opposed to promises.

Lastly, often employees want to work beyond age 65 for financial reasons. Filion suggests having financial counselling available for employees.

“Some employees continue to work beyond age 65 because they do not have sufficient savings to retire at that time,” he says. “Accordingly, employers are training them about savings and retirement planning to ensure insufficient funds are not an obstacle for their early retirement.”

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