Ontario, Canada Arbitrator Deems Termination of LTD Coverage for Employees at Age 65 a “Reasonable Limit” Under Canadian Charter of Rights

In Rayonier v Unifor, Locals 256 and 89, 2022 CanLII 75226 (ON LA), a union filed an individual grievance on behalf of an employee who died at age 66 while still an active employee.  This grievance alleged that the employer violated the clear wording of the Collective Agreement (CA) by reducing the amount of life insurance an employee was entitled to when they reached age 65. The employer’s primary defence to this claim was based on the equitable doctrine of estoppel: the insurance policy was in place for over two decades without the union ever questioning the age reduction, filing a grievance or raising the issue in bargaining, indicating that it was satisfied with the terms of the policy. 

In support of two locals’ grievances relating to the unavailability of long-term disability (LTD) to employees at the age of 65, the union noted that Ontario’s Human Rights Code (Code) and the Employment Standards Act, 2000 (ESA) permit distinctions based on age in short- and long-term disability plans.  The union argued, however, that these “carve outs” violated s. 15(1) of the Canadian Charter of Rights (Charter), which provides:

Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on …age....

In its defence, the Employer relied on s. 1 of the Charter and the doctrine of estoppel.  Section 1 of the Charter:

…guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.

Arbitrator Paula Knopf upheld the life insurance grievance based on her interpretation of the CA’s language, and her finding that the applicable provision of the insurance policy was not incorporated into the CA; however, she dismissed the two grievances relating to the LTD coverage because she determined that although terminating LTD coverage at age 65 was prima facie discrimination contrary to s. 15 of the Charter (active employees age 65 and over did not have the LTD benefit that was available to younger employees), it was saved by s. 1 of the Charter because it was a “reasonable limit” on Charter rights.

Life Insurance

Article 35(a) of the life insurance provision in the CA provided:

The Company will provide at no cost to the employee group life insurance coverage to be two time [sic] annual earnings at the classified rate rounded upwards to the nearest thousand dollars for all active employees.

The CA also provided for a flat benefit for employees who reached age 60 and had five years of continuous service, and the employer’s insurance contract provided there would be a reduction to a flat rate at age 65.   


Arbitrator Knopf used basic rules of contract interpretation to examine the words of Article 35(a) of the CA in context; she considered their plain and ordinary meaning and whether they could be read harmoniously with the scheme of the entire contract. She noted that Article 35(a) made no clear mention that the life insurance benefit would be reduced at age 65 and that the parties could have specified a differential in life insurance payouts at age 65 in Article 35(a).  Because they did not do so, the arbitrator concluded that Article 35(a) must be read “to provide what it promises,, i.e., that the estate of any active employee who dies is entitled to a life insurance payment of twice the employee’s annual salary, regardless of the employee’s age at death. 

In considering the flat benefit for employees who reached age 60 and had five years of continuous service, Arbitrator Knopf found it had not been made clear that if such employees remained actively employed they would no longer be entitled to receive the life insurance benefit of twice their annual salary.  She found also that the insurance contract that provided there would be a reduction to a flat rate at age 65 had not been incorporated into the CA as required, and although the reduction was described in other materials, they were difficult to access.   

Arbitrator Knopf then considered whether the union was estopped from asserting that the estate of any active employee who dies is entitled to a life insurance payment of twice the employee’s annual salary, regardless of the employee’s age at death, because it never made that assertion in two decades of collective bargaining.  The arbitrator stated that to answer this question, she had to consider whether there was evidence that a member of “the union hierarchy” responsible for enforcing or administering the CA, knew of or acquiesced to the reduction at age 65.  The arbitrator concluded that at all relevant times, no union official was aware of the reduced entitlement.

The arbitrator then considered whether the union’s inaction due to unawareness created an estoppel.  She concluded that because the details of the life insurance reduction at age 65 was not understood or known to union officials prior to the filing of the grievances, “it would be unfair or inequitable to conclude that an estoppel arises that prevents the Union from relying on the clear meaning of Article 35(a).”

Accordingly, Arbitrator Knopf concluded that the individual grievor’s estate was entitled to receive life insurance equaling twice his annual salary at the time of his death in accordance with Article 35(a). 


The LTD coverage provided for in the CA was unavailable to employees who were age 65 and over.


Arbitrator Knopf concluded that making age 65 an age to terminate LTD coverage was prima facie discrimination contrary to s. 15 of the Charter because active employees ages 65 and over did not have the LTD benefit that was available to younger employees and, therefore, they were treated differently.  She determined, however, that the exclusion of coverage was saved by s. 1 of the Charter because it was a “reasonable limit” on Charter rights. 

Arbitrator Knopf noted that although employees 65 and over may not have the same benefits, the Supreme Court has stated repeatedly that “not all distinctions or differences on an enumerated ground amount to discrimination.  It is the disadvantage or the loss of dignity that matters.”  Everyone does not need to be treated the same, but differences must be reasonably justified. 

In coming to the conclusion that the exclusion of LTD coverage was saved by s. 1 of the Charter because it was a “reasonable limit,” Arbitrator Knopf distinguished the decision of the Human Rights Tribunal of Ontario (HRTO) in Talos v. Grand Erie District School Board, 2018 HRTO 680.  In Talos, the HRTO found that section 25(2.1) of the Code, a carve-out that allows employers to terminate employee group health, dental and life insurance benefits at age 65, was a prima facie violation of section 15 of the Charter.  The arbitrator distinguished Talos on the basis that the HRTO expressly stated that its decision did not address LTD benefits.  Instead, Arbitrator Knopf followed Chatham-Kent (Municipality) v. Ontario (Attorney General) [2010] O.L.A.A. No. 580, in which an arbitrator found that providing different treatment with respect to participation in benefit and group insurance plans can be a reasonable limit on equality rights.

Upon determining that the exclusion of LTD coverage at age 65 was saved by s. 1 of the Charter because it was a “reasonable limit” on Charter rights, Arbitrator Knopf conducted a contextual analysis and emphasized the following factors: 

  • Availability of Secure Pension Income:  The parties’ choice of age 65 as the limit on LTD coverage is rationally connected to and consistent with the age at which government pensions are unreduced and also coincides with the age at which the parties’ CA provides employees an unreduced pension (as early as age 58 or by the time they are 65, unless they have short service).  The loss of LTD coverage at age 65 is offset by the opportunity employees 65 and over have to transition from LTD to retirement with secure pension income that may be greater than what would be available to them under an extended LTD plan. This saves them from income insecurity and the stigma of loss of dignity.
  • Meets Proportionality Test:  The limit on LTD coverage meets the “proportionality test” because age is a lesser concern in the context of this CA’s package of benefits and the importance of giving deference to the economic and social value of allowing employers and employees to determine the conditions of their workplaces for themselves:
    • In addition to the availability of secure pension income referred to above, under the parties’ CA a suite of generous health and welfare benefits is available to active employees ages 65 and over without age restrictions, e.g., dental, Short-Term Disability (STD) for 52 weeks, Extended Health Insurance, safety shoes, and glasses. The termination of LTD at age 65 is not perpetuating negative stereotypes about aging because rather than encouraging employees to leave at age 65, active workers who are 65 and over are supported with a substantial suite of health-related benefits that have no age limit.
    • If the LTD cut-off is declared unenforceable the cost calculations that led the parties to jointly determine the overall compensation package would be upset, and this would undermine the Charter’s other goal of protecting the collective bargaining process.
  • No Prejudicial Impact or Significant Disadvantage:  Given the availability of reasonable pension income security for older employees, and the ability of older workers to continue their employment with a significant suite of health benefits, employees who are 65 and over experience no prejudicial impact or significant disadvantage due to the LTD plan that is in place; nor is there any evidence that anyone has been adversely affected by it. 
  • Cost Disproportionate to Benefits:  Most bargaining unit members retire at the average age of 60; only four (of 300) active employees in the workplace are ages 65 or over. The cost of securing unlimited or even a somewhat limited LTD coverage for active employees 65 and over would be disproportionate to its benefits. 
  • Burden of Predicted Future Increased Cost Will Fall on Younger Workers: The cost of LTD coverage for active employees ages 65 and over could increase exponentially if people work longer in the future, as predicted.  Such future costs will have an impact on the compensation package available to bargaining unit members, as the burden of coverage for older workers will fall on younger workers.

Accordingly, Arbitrator Knopf concluded that the two policy grievances concerning LTD would be dismissed on the basis that although the CA created an age differential for LTD coverage, it was demonstrably justified and saved by s. 1 of the Charter.   

Bottom Line for Employers

Employers should take note that the arbitrator in Rayonier concluded that a CA’s denial of LTD benefits to active employees ages 65 and over could be saved by s. 1 of the Charter as a “reasonable limit” on Charter rights only because specific contextual factors existed in that case.  The arbitrator was influenced by the employees’ access at age 65 to secure pension income and substantial health-related benefits with no age limit, and by how rarely employees in that workplace worked past age 65.  It was only after she assured herself of these contextual factors and noted concerns relating to the high cost of LTD coverage for employees ages 65 and over, that the arbitrator concluded that the exclusion could be saved by s. 1 of the Charter.  Accordingly, in the absence of contextual factors similar to those in Rayonier, or others that are equally persuasive, employers that deny LTD benefits to active employees ages 65 and over may be found in breach of s. 15(1) of the Charter.  

Rayonier also puts employers on notice that if they will be reducing or excluding a benefit for employees ages 65 and over, this should be expressly stated in their CA.  In the absence of an express statement, an arbitrator may consider the plain and ordinary meaning of the words used in the CA and read them as providing only what they promise, as the arbitrator did in Rayonier.  As well, Rayonier cautions employers that they should take proactive steps to make both union officials and employees aware of a benefit’s reduction or exclusion. 

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.