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Can employers terminate long term disability benefits at age 65? Earlier this year, the British Columbia Labour Relations Board (BCLRB) in Okanagan College, 2026 BCLRB 39 overturned an arbitrator’s decision and held that an employer’s long-term disability (LTD) plan which terminated benefits at age 65 was a bona fide plan, pursuant to s. 13(1)(b) of BC’s Human Rights Code (Code).
Background
The union representing faculty members of Okanagan College filed a grievance regarding the College’s LTD Plan, which terminated benefits at age 65. The Union argued that the LTD Plan violated the prohibition against age discrimination as set out in s. 13(1)(b) of the Code. The College denied the grievance and the matter was referred to arbitration.
After deciding that the Plan was prima facie discriminatory, the Arbitrator reviewed whether the Plan qualified as a bona fide plan under s. 13(3)(b) of the Code (bona fide exception) by applying the test established by the Supreme Court of Canada in New Brunswick (Human Rights Commission) v. Potash Corporation of Saskatchewan Inc., 2008 SCC 45 (Potash). To be a bona fide plan, the Potash test requires that it be a legitimate plan, adopted in good faith, and not for the purpose of defeating protected rights.
The Arbitrator held that while the Plan was legitimate and adopted in good faith, it was not bona fide because the College knew and accepted that the Plan was continued for the purpose of defeating rights. In the Arbitrator’s view, while employers may have reasonably believed for a period that the age 65 cutoff was primarily driven by availability and cost, shifts in the insurance market have revealed new options for post-65 benefits which dispel the employer’s prior attitudes. However, the Arbitrator declined to answer the question as to whether the bona fide exception infringes the Charter.
The Decision
The BCLRB held that the LTD Plan was in fact a bona fide plan. The BCLRB found that the Arbitrator failed to correctly interpret and apply the Potash test as set out by the majority. Instead, the Arbitrator incorrectly applied the reasoning of the dissenting judges, who considered whether the post-65 exemption was reasonably necessary to maintain the functionality and sustainability of the plan.
The BCLRB cited the majority’s holding that “unless there is evidence that the plan as a whole is not legitimate … it will be immune from the conclusion that a particular provision compelling retirement at a certain age constitutes age discrimination.” However, the BCLRB held that the Arbitrator adopted the dissent’s view that a bona fide analysis is not solely about whether the plan is a “sham”, but also whether it is “reasonably required having regard to the operation and sustainability of the plan.”
Given the error, the BCLRB performed its own analysis and determined that the Plan was bona fide. The Arbitrator already reached the conclusion that the LTD Plan was legitimate and adopted in good faith, given that it was negotiated in the context of collective bargaining and was within the Employer’s statutory duty to balance its budget. Since it was the Arbitrator’s incorrect analysis considering the Employer’s ability to obtain some form of LTD plan for those over 65 that ultimately led to the Award, the BCLRB held that the Employer demonstrated that they did not breach the Code. The BCLRB also remitted the matter back to the Arbitrator to consider the constitutional challenge to the Code’s bona fide exception.
Key Takeaways
The BCLRB’s decision affirms that LTD plans with an age 65 cutoff do not violate BC’s Human Rights Code. While it remains to be seen whether the arbitrator will find that the bona fide exception of the Code is itself discriminatory, an Ontario arbitrator recently held that a similar provision in Ontario’s Human Rights Code violated s. 15(1), but was a reasonable limit under s. 1 of the Charter (University Health Network (Toronto Western Hospital and Toronto General Hospital) v. Ontario Nurses’ Association, 2025 CanLII 47230). Should the BC arbitrator find that bona fide exception is unconstitutional, there will likely be a court challenge which will hopefully provide clearer guidance to businesses across Canada on Code-based age discrimination provisions and their applicability to benefit plans.
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