In a landmark ruling, a Québec workers’ compensation tribunal has ruled that reducing injured workers’ income replacement benefits, including reduction at the traditional retirement age of 65, offends both provincial human rights legislation and the Charter of Rights and Freedoms (Charter). In the decision, Cote v. Traverse Rivière-du- Loup, St.-Saint-Siméon, the tribunal held that s. 56 of the Québec workers’ compensation legislation discriminates against workers on the basis of age and, as a result, it was in breach of s. 10 of the Québec Charter of Human Rights and Freedoms and s. 15(1) of the Canadian Charter.

The case involved a 64-year-old worker who was injured on the job. His workers’ compensation payments were reduced by 25% from the second year of the date of his disability, and then by 50% from the third year, and 75% from the fourth year of his entitlement. This was based on the schedule of declining benefits set out in the legislation. The worker, Mr. Cote, argued that this age-based reduction was discriminatory under the relevant provisions of the Québec Charter of Rights and Freedoms, and the Charter.

In this decision, the tribunal reviewed s. 56 and its establishment of a distinct rule, based on the traditional retirement age of 65 years. The tribunal made a political statement in commenting that this arbitrary, but traditional, retirement age “perpetuated the myth about older persons’ ability to work and this is discriminatory.”

Interestingly, evidence was lead by the Attorney General of Québec that the average retirement age of workers in Québec is just in excess of 59 years of age. Therefore, it was argued to be quite reasonable to expect a reduction in income, whether at work or on workers’ compensation benefits, by a claimant such as Mr. Cote. The Attorney General of Québec also argued that the reduction in workers’ compensation benefits by statute in Québec was an acceptable and reasonable compromise based on the reality of the average retirement age, and the need for certainty in funding of the workers’ compensation system. These arguments were ultimately rejected by the tribunal.

In further defending the legislative provision, the Attorney General of Québec argued that for these reasons, the income replacement benefits reduction was justifiable, under s. 1 of the Charter. The traditional retirement age of 65 was justifiable and otherwise reasonable given the nature of funding of the workers’ compensation system in Québec and the traditional retirement age, and could therefore be “saved” by section 1.

This decision has been sent to judicial review to Québec Superior Court. Judicial review is a narrow form of review by a higher Court that requires a jurisdictional error or a decision that is patently unreasonable. Judicial review is not a full right of appeal with respect to the facts and legal issues of the case.

The decision of the tribunal in Québec, subject to being overturned on appeal, has very broad implications. First, this decision potentially affects standards of declining compensation provided by pension plans to reduce or eliminate benefits at a certain age. Further, more broadly, the reduction of benefits based on age, and a presumptive retirement age of 65, exist in other Canadian jurisdictions under workers’ compensation legislation and pension legislation.

Readers should also note that there is a case currently before the Supreme Court of Canada, originating in British Columbia, that is examining pension plans and benefit reduction based on age. At the appeal level, the British Columbia Court of Appeal held that such a distinction based on age was not discriminatory, per se, in reducing pension entitlement on the basis of age and presumptive retirement age. It remains to be seen how the SCC will address the issue.

The tension between traditional retirement age and the funding of pension and other state compensation systems with the legal prohibition against age discrimination in human rights legislation and the Charter are profound. This issue could impact many Canadian jurisdictions with respect to both pension and workers’ compensation legislation. It also highlights the tension between the need to properly predict and calculate the funding of workers’ compensation and pension systems across Canada. Many workers’ compensation systems are “under water,” being underfunded and are technically on the verge of bankruptcy. For example, in Ontario the Workplace Safety and Insurance Board announced austerity measures as a result of the growing unfunded liability, which is now in excess of $12 billion.

The financial viability and certainty for those receiving benefits from workers’ compensation systems and pension plans is critically dependent on the ability to properly fund both systems. These cases may have significant implications for that important societal issue.