Kovacs v. Arcelor Mittal Montreal, 2010 HRTO 303

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

John Kovacs

Applicant

-and-

Arcelor Mittal Montreal Inc.

Respondent

CASE RESOLUTION CONFERENCE DECISION

Adjudicator: Brian Sheehan

Date: February 9, 2010

Citation: 2010 HRTO 303

Indexed as: Kovacs v. Arcelor Mittal Montreal

APPEARANCES BY

John Kovacs, Applicant ) Self-Represented

Arcelor Mittal Montreal Inc., Respondent ) Sarah Crossley, Counsel

1This is an Application filed December 31, 2008 under Section 53(3) of Part IV of the Human Rights Code R.S.O. 1990 as amended (the “Code”). The Application asserts that the respondent violated the Code with respect to employment on account of the applicant’s age. In particular it was submitted the applicant was the subject of discrimination since he was not allowed to take advantage of an early retirement program offered by the respondent on account of his age.

2A Case Resolution Conference (“CRC”) took place on November 3, 2009. At the outset of the proceeding, the parties were advised that the hearing would be conducted in an expeditious manner pursuant to the expectations expressed in the Code and the Tribunal's Rules of Procedure.

3At the outset of the hearing, the applicant agreed to a request by the respondent to remove the respondent, Richard Leblanc from this matter.

Background Facts

4The applicant was an employee with approximately 27 years of service at Stelwire Ltd., which operated two facilities: Burlington Works and Parkdale Works. The applicant worked at the Burlington Works operations and, as such, was a member of a bargaining unit represented by the United Steelworkers of America (USWA), Local 5328.

5In 2004, Stelwire Ltd. filed for protection under the Companies’ Creditors Arrangement Act RSC. 1985, C-36. The respondent subsequently acquired Stelwire Ltd. As part of the acquirement process, the respondent entered into a Memorandum of Agreement with the USWA and its Locals at the Burlington Works and Parkdale Works operations.

6That Memorandum of Agreement was predicated on the understanding that the Burlington Works operations would be closed. As part of that Agreement the parties agreed to negotiate an early retirement package. The parties subsequently entered into a closure agreement with respect to the Burlington Works operation, which included an early retirement program, enhanced severance packages and preferential hiring provisions for Burlington Works employees at the Parkdale Works operations.

7Mr. Scott Duvall, president of USWA Local 5328 at the relevant time, testified regarding the negotiation of the closure agreement for the Burlington Works operations. It was his evidence that the initial goal of the Union was to ensure that any employee over the age of 50 would be eligible to participate in the early retirement program. The respondent, however, took the position that that proposal would be cost prohibitive. The parties’ proceeded to negotiate over a formula, within certain cost constraints, that would capture the greatest number of retirees based upon the demographics of the age and the years of service of the eligible employees in the bargaining unit.

8During those negotiations the Union had the assistance of an expert in pension matters and legal counsel. Mr. Duvall testified that the Union was advised that the agreed to early retirement program did not offend the provisions of the Pensions Benefits Act and/or the Code.

9To be eligible for the negotiated early retirement program an employee had to satisfy one of the following requirements:

(i) 30 or more years of service;

(ii) older than age of 55 with 15 or more years of service;

(iii) at least 52 years of age but less than 55 years of age with 25 or more years of service.

10The applicant did not satisfy any of the eligibility requirements since he was 47 years old and had only 27 years of service.

11The membership of USWA Local 5328 subsequently ratified the Burlington Works closure agreement and with it the negotiated early retirement program.

12Those employees at the Burlington Works operation who did not meet the eligibility requirements of the early retirement program were given the option of either being placed on a recall list for available positions at the Parkdale Works operations or accepting an enhanced severance package. The applicant chose to be placed on the recall list for the Parkdale Works operations.

Position of the Applicant

13The thrust of the applicant’s argument was he was subjected to differential treatment on account of his age. From his perspective, he was in a worse off position financially to similarly situated co-workers solely on account of his age. For example, an employee who was 53 years old who had the same 27 years of service as the applicant met the eligibility requirements while he did not. Moreover employees over the age of 55, who had considerably less service than him, as low as 15 years of service, were potentially eligible for the early retirement program.

14The applicant suggested that a fairer approach that could have been adopted would have been to use an eligibility requirement based on a combined age and service factor of 70. Using the “70 factor” younger employees who had extensive service would still potentially be entitled to be part of the early retirement program.

Decision

15In the case at hand the rationale for the parties negotiating the early retirement plan was clear. The respondent was endeavouring to reduce the ongoing costs of operating the bankrupt entity it was acquiring. An early retirement program and other voluntary exit programs (i.e., enhanced severance packages) were key measures for the respondent in its efforts to deal with the consequences of its decision to close the Burlington Works operations.

16For the Union the negotiation of the early retirement program provided superior benefits to older, long service employees; individuals who may experience greater difficulty in obtaining alternative employment if permanently laid-off. Additionally, the program acted to reduce involuntary job losses associated with the restructuring that arose as result of the closing of the Burlington Works operations.

17For similar reasons as existed in the case at hand early retirement plans, which may contain eligibility requirements based on age, are common in unionized workforces. They are especially common with respect to a major restructuring of a workforce.

18The Legislature provided for in the Code an express provision specifically recognizing that a voluntary early retirement program that provided for a differentiation between employees on account of age may not be discriminatory for the purposes of the Code. Specifically section 25 (2.1) reads as follows:

The right under section 5 to equal treatment with respect to employment without discrimination because of age is not infringed by an employee benefit, pension, superannuation or group insurance plan or fund that complies with the Employment Standards Act, 2000 and the regulations thereunder.

19Referring to the relevant provisions of the Employment Standards Act, 2000, S.O. 2000, c. 41, as amended, (ESA) section 44(1) of that Act generally prohibits, except as prescribed, differential treatment under a benefit plan on account of age. In particular that provision provides:

Except as prescribed, no employer or person acting directly on behalf of the employer shall provide, offer or arrange for a benefit plan that treats any the following persons differently because of the age, sex or marital status of employees:

1. Employees

2. Beneficiaries

3. Survivors

4. Dependents.

20Notwithstanding the general prohibition set out in section 44(1) the Regulations under the ESA pertaining to benefit plans specifically allow for a differentiation on account of age with respect to a voluntary early retirement program. In particular section 4(3) of Ontario Regulation 286/01 reads as follows:

The prohibition in subsection 44(1) of the Act does not apply with respect to a provision in a pension plan that makes a differentiation because of age and establishing a normal pensionable date for voluntary retirees or an earlier voluntary retirement date or age, unless,

(a) the Pensions Benefits Act applies to the plan; and

(b) the plan contravenes the provisions of that Act respecting normal retirement dates in early retirement pensions.

21The plan in this case did not violate the provisions of the Pension Benefits Act regarding the normal retirement date. Accordingly, since the negotiated early retirement program complied with the requirements of the ESA and its regulations; then as a result of section 25(2.1) there was no infringement of section 5 of Code.

22The impact of section 25(2.1) of the Code in insulating early retirement programs from being challenged as being discriminatory on account of age was the subject of two arbitration decisions involving teachers: Peel District School Board v. Ontario Secondary School Teachers’ Federation, Local 19 (Clipperton) [1999] O.L.A.A. No. 999 (Mitchnick); Superior-Greenstone District School Board v. Ontario Secondary School Teachers’ Federation District 6B, [2002] CLB 12743(Howe). In both cases a provision of an Early Retirement Incentive Plan, set out in the relevant collective agreements, which mandated an eligibility requirement of the age of 55, was found not to violate the provisions of the Code.

23An additional point is that not every differentiation on account of age in the employment context will necessarily constitute discrimination for the purposes of the Code. A relevant factor in determining whether there is discrimination is whether the individual claiming to be adversely affected is part of a historically disadvantaged group. The applicant was clearly not a member of a historically disadvantaged group. The significance of whether the individual claiming to be adversely affected by the differentiation on account of age is part of historically disadvantaged group was thoroughly reviewed in Barrett v. Cominco , 2001 BCHRT 46.

24Finally it must be noted if, as suggested by the applicant, a “70 factor” eligibility requirement was utilized employees would still be potentially adversely affected solely on account of their age. For example a 45 year old employee with 25 years of service would satisfy the “70 factor” while a 44 year old employee with 25 years of service would not.

25For the above reasons, the Application is dismissed.