Pensions, Benefits & Executive Compensation Newsletter ' March 2021

• Published date: 10 March 2021
• Subject Matter: Employment and HR, Retirement, Superannuation & Pensions, Employee Benefits & Compensation, Employee Rights/ Labour Relations
• Law Firm: Blake, Cassels & Graydon LLP
• Author: Blakes Pensions, Benefits & Executive Compensation Group

EQUALITY RIGHTS

Fraser v. Canada, 2020 SCC 28

This is an appeal of the Federal Court of Appeal's decision in Fraser v Canada, 2018 FCA 223, as discussed in our January 2019 Pensions, Benefits and Executive Compensation Newsletter.

Ms. Fraser, Ms. Fox and Ms. Pilgrim (Claimants) were three retired members of the Royal Canadian Mounted Police (RCMP) who took maternity leave in the 1990s. Upon returning to full-time service, they experienced difficulties balancing their work obligations with childcare responsibilities. These difficulties caused Ms. Fox to retire from the RCMP in 1994 and resulted in Ms. Fraser taking unpaid leave in 1997. At the time, the RCMP did not permit regular members to work part-time. In December 1997, the RCMP introduced a job-sharing program in which multiple RCMP members could split the responsibilities of one full-time position, allowing each member to work fewer hours than a full-time employee. The Claimants enrolled in the job-sharing program along with 137 other RCMP members between 1997 and 2011. Most participants were women with children. From 2010 to 2014, all RCMP members who job-shared were women, and most of them cited childcare as their reason for joining the program.

Pursuant to the Royal Canadian Mounted Police Superannuation Act and the associated Royal Canadian Mounted Police Superannuation Regulations (Pension Plan), RCMP members can treat certain gaps in full-time service, such as leave without pay or suspension without pay, as fully pensionable. Upon returning from unpaid leave, a member can buy back the service they missed by making the contributions that both the member and the RCMP would have made had the member been actively employed, increasing the member's years of full-time pensionable service and resulting in a more valuable pension. However, no such buy-back option is available to job-sharers who temporarily reduce their working hours, as job-sharing is classified as part-time work under the Pension Plan for which participants cannot obtain full-time pension credit.

The Claimants argued that the Pension Plan violated section 15(1) of the Canadian Charter of Rights and Freedoms (Charter) on the basis of sex, because it prevents women with children -- the majority of participants in the job-sharing program -- from contributing to pensions in the same way as members who worked full-time or took unpaid leave.

The Federal Court dismissed the application, holding that there was insufficient evidence that job-sharing was disadvantageous compared to unpaid leave and, even if it was, these outcomes were the result of a participant's choice to job-share. The Federal Court of Appeal upheld the Federal Court decision, holding that job-sharing RCMP members did not receive inferior compensation to members on leave without pay and that any adverse impact on job-sharing participants flowed from their choice to work part-time, not from the Pension Plan.

Writing for the majority, Justice Abella allowed the appeal and held that the Pension Plan constituted adverse impact discrimination on the basis of sex.
Justice Abella applied the two-step approach to section 15(1) analysis: to prove a prima facie violation of section 15(1), a claimant must demonstrate that the impugned law or state action (a) on its face or in its impact, creates a distinction based on enumerated or analogous grounds, and (b) imposes burdens or denies a benefit in a manner that has the effect of reinforcing, perpetuating, or exacerbating disadvantage.

With respect to the first stage of section 15(1) test, Justice Abella found that the buy-back restriction met the first stage of the section 15(1) test. The statistical evidence shows that RCMP members who worked reduced hours in the job-sharing program were predominantly women with young children. Moreover, Justice Abella referred to evidence about the disadvantage women face as a group in balancing professional and domestic work. These sources of evidence show the clear association between gender and fewer or less stable working hours, and they demonstrate that the RCMP's use of a temporary reduction in working hours as a basis for imposing less favourable pension consequences has an adverse impact on women.

With respect to the second stage of the section 15(1) test, Justice Abella found that the Pension Plan perpetuated a long-standing source of disadvantage to women: gender biases within pension plans, which have historically been designed for "middle and upper-income full-time employees with long service, typically male". Justice Abella noted that differential treatment can be discriminatory even if job-sharers choose to job-share.

After finding a prima facie breach of section 15(1), Justice Abella conducted section 1 analysis and found that the Pension Plan could not be demonstrably justified in a free and democratic society. Justice Abella found that the Attorney General identified no pressing and substantial policy concern, purpose or principle that explains why job-sharers should be denied full-time pension credit for their service. Additionally, Justice Abella indicated that this limitation is entirely detached from the purposes of both the job-sharing scheme and the buy-back provisions. Job-sharing was clearly intended as a substitute for leave without pay for those members who could not take such leave due to personal or family circumstances. It is unclear, then, what purpose is served by treating the two forms of work reduction differently when extending pension buy-back rights.

Justices Brown and Rowe in their dissenting reasons found that the Pension Plan does not represent a source of ongoing systemic disadvantage as it does not contribute to women's systemic disadvantage, nor does it reinforce, perpetuate or exacerbate the pre-existing disadvantage of women in the workplace which arises in part from unequal distribution of parental responsibilities.

In separate dissenting reasons, Justice Cote found that the Pension Plan created a distinction not on the basis of sex, but on the basis of caregiving responsibilities. Because the Court does not recognize caregiving status as an analogous ground under section 15(1), the Claimants fail at stage one of the section 15(1) analysis.

Supreme Court of Canada Decision

INTERPRETATION OF PENSION PLAN TERMS

United Steel v. Georgia-Pacific LP, 2020 ONSC 1560

Georgia-Pacific LP (Employer) placed its employees on indefinite layoff with recall rights following the idling of the plant that they worked in. Pursuant to an agreement between the Employer and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (United Steel Workers), Local 14994 (Union), the employees who were laid off could elect at any time to either take their severance pay or to retain their recall rights. Six employees, who were the subject of the grievances, elected to forgo their recall rights and accept severance pay. As a result, the pension administrator, on behalf of the Employer, calculated the employees' pensions without including any grow-in benefits provided for under the Ontario Pension Benefits Act (PBA). None of the employees were advised that they would not be entitled to grow-in benefits.

Under the PBA, grow-in benefits are only available if an employee ceases to be a member of the pension plan as a result of an "activating event" under section 74(1) of the PBA, including an employer's termination of a plan member's employment. The issue in this case is whether the employees had voluntarily terminated their employment and, therefore, were not entitled to grow-in benefits under the PBA.

The Ontario Divisional Court set aside the arbitrator's decision that the employees had not been terminated within the meaning of the PBA and remitted the case to a different arbitrator. The Divisional Court found that the arbitrator failed to consider section 4(2) of Regulation 288/01 made under the Employment Standards Act (Regulation). Under section 4(2) of the Regulation, if an employer lays off an employee for a period that may exceed the period of temporary layoff, and doing so might be considered a breach of the collective agreement, the employer may give the employee a written notice of indefinite lay-off and the employer shall be deemed to have provided the employee with a notice of termination as of the date of notice. In the present case, the employees were all provided with a written notice of indefinite layoff by the Employer. Pursuant to the Regulation, the Employer may be deemed to have terminated the employees as of the notice date. If this is the case, the employees may be entitled to grow-in benefits.

Ontario Divisional Court Decision

Aziz v. Calgary Firefighters Association., 2020 AHRC 66

Paul Aziz was a firefighter employed by the City of Calgary (City) and a member of the Calgary Firefighters Association, Local 255, International Association of Firefighters (Union). Mr. Aziz was forced to retire at age 60 pursuant to a mandatory retirement provision in a Supplementary Pension Plan (FSPP), which formed part of a...