Legal News

"Bona Fide Pension Plan" defined by the Supreme Court of Canada

The Supreme Court of Canada recently interpreted the term “bona fide” as it relates to pension plans within the context of human rights legislation. This decision stems from an age discrimination complaint by an employee who was asked to retire at age 65 pursuant to a mandatory retirement policy contained in the employer’s pension plan. The New Brunswick Human Rights Act expressly allows an employer to terminate an employee if the decision is taken pursuant to a bona fide retirement or pension plan.

The Court found that the term “bona fide” in the context of a pension plan is different from the term bona fide occupational requirement (“BFOR”). That is, a “bona fide” plan is not judged against the standard of accommodation to the point of undue hardship.

The Court held that in order for a pension plan to be “bona fide”, it must be subjectively and objectively bona fide. This means that the plan must be adopted in good faith and not for the purpose of defeating protected rights. The focus of the inquiry is on the overall bona fides of the plan, and not the individual components or conditions of the plan.

This decision confirms that differences based on age under bona fide pension and group insurance plans are not subject to an “undue hardship” standard. The BC Human Rights Code does not contain provisions identical to the New Brunswick Act with regard to termination of employment under a pension plan, but does allow generally for differential treatment based on age under a “bona fide” retirement, pension, or group insurance plan (such as an extended health, dental, and short term or long term disability plan). The issue of differential treatment can arise for example under long term disability plans which typically provide coverage only up to age 65. Accordingly the Court’s ruling on the definition of a “bona fide” plan provides useful guidance in determining whether pension or group insurance plans are “bona fide” for purposes of the BC Code.

New Brunswick (Human Rights Commission) v. Potash Corporation of Saskatchewan Inc., 2008 SCC 45