BC Labour Relations Board Overturns Arbitration Award Regarding Age 65 Cutoff to LTD Benefits

One of several recent decisions dealing with challenges to age 65 cutoffs in employee group benefit plans, the British Columbia Labour Relations Board’s (BCLRB) decision in Okanagan College, 2026 BCLRB 39 is significant for employers with group benefit plans that establish distinctions based on whether an employee has reached age 65.

The BCLRB allowed Okanagan College’s (College) application for review of Arbitrator Peltz’s 2024 award, in which the arbitrator found the College’s long-term disability (LTD) plan to not be a bona fide plan under the British Columbia Human Rights Code (BC Code). The LTD plan ceased LTD benefits at age 65. The BCLRB found that Arbitrator Peltz had erred in applying the test for evaluating whether a plan is bona fide, asset out by the majority in the 2008 Supreme Court of Canada (SCC) decision, New Brunswick Human Rights Commission) v. Potash Corporation of Saskatchewan Inc. (Potash). Finding that the College’s LTD plan was indeed a bona fide plan under the BC Code despite its cessation of LTD benefits at age 65, the BCLRB remitted the case back to Arbitrator Peltz to resolve Okanagan College Faculty Association’s (Association) Charter argument that the bona fide plan exception under the BC Code infringes the equality guarantee in s. 15 of the Charter in a manner that is not justified by s. 1 of the Charter.

The 2024 Award

The Association initially grieved the termination of benefits at age 65 under the College’s group LTD plan in 2013. The Association argued that the denial of LTD benefits to employees over age 65 is:

a violation of the “no discrimination” and “health and welfare” articles of their collective agreement with the College;
a violation of the prohibition against age discrimination regarding terms and conditions of employment under s. 13(3)(b) of the BC Code; or
in the alternative, if the age 65 cut-off in the College’s LTD plan is permitted due to the bona fide plan exception under s. 13(3)(b) of the BC Code, the BC Code itself violates s. 15 of the Charter and is not saved by s. 1 of the Charter.

The Association served the requisite notice of constitutional question in 2016, and the Attorney General of British Columbia intervened in the arbitral proceedings to defend the legislative provisions of the BC Code. Substantial expert evidence was presented by the College, the Association and the BC Attorney General, speaking to the relevant insurance underwriting principles, actuarial experience of LTD benefit plans as well as justifications and critiques of age-based distinctions in benefits plans under collective agreements.

The Arbitrator dismissed the Association’s arguments that the collective agreement itself required LTD benefits to continue past age 65. While the relevant provision of the collective agreement expressly prohibit “discrimination based on the grounds set out in the [BC Code]” and “discrimination, restriction or coercion exercised or practiced with respect to any employee in the matter of hiring, wage rates, training, upgrading, promotion, transfer, termination, discipline, dismissal or otherwise by reason of age …”, the Arbitrator found that the statutory bona fide plan exception in the BC Code meant that the College had not violated the collective agreement by implementing an age 65 cut-off in its LTD plan, if, in fact, the College’s LTD plan was a bona fide plan for purposes of the BC Code.

Arbitrator Pelz adopted a two-step approach to resolving the Association’s argument that the age 65 cut-off violated the BC Code: he considered whether the termination of LTD benefits at age 65 constitutes prima facie discrimination; and if so, whether the LTD plan qualifies as a bona fide plan per the exception in s. 13(3)(b) of the BC Code. The Arbitrator found that the age 65 cut-off did meet the prima facie threshold for discrimination under the BC Code, accepting the Association’s evidence and arguments that the age-based distinction caused adverse impact to older employees because the age 65 cut-off was “an arbitrary impediment to late career income security, including pension building.”

The Arbitrator also accepted the Association’s argument that the College’s LTD plan was not a bona fide plan pursuant to the statutory exception from discrimination under s. 13(3)(b) of the BC Code. Citing Potash, the Arbitrator applied the following test: “a bona fide plan is legitimate, adopted in good faith and not for the purpose of defeating rights.” The Arbitrator found there was no issue under the first two components of the Potash test, in that the College’s LTD plan was both legitimate and adopted in good faith, but did find that it failed the final component of the Potash test. According to Arbitrator Peltz, the College “could not reasonably have believed that the Plan was not adopted to defeat protected rights … the [College] knew and accepted that the Plan was continued for the purpose of defeating protected rights.” Based on the expert evidence submitted, the Arbitrator found that the realities of the Canadian insurance market have shifted since the end of age 65 mandatory retirement in 2008, options for post-65 LTD benefits have emerged, and “the costs of a post-65 benefit would not be destabilizing.”

Since the Association was successful in arguing that the College’s LTD plan did not meet the bona fide plan exception under the BC Code, Arbitrator Peltz declined to decide on the issue of whether the BC Code’s exception violated the s. 15 equality guarantee under s. 15 of the Charter. The arbitrator’s decision was concerning, as it effectively established that LTD plans with age 65 cutoffs are not bona fide plans.

BCLRB Decision

The College applied to the BCLRB, requesting review of Arbitrator Peltz’s 2024 award and arguing that it incorrectly applied the Potash test formulated by the majority of the SCC regarding the bona fide plan exception to age discrimination under s. 13(3)(b) of the BC Code. The BCLRB found that Arbitrator Peltz’s award “engages in a reviewable error through an incorrect application of the Potash test” and should be set aside, with the BCLRB substituting its own finding that the College’s LTD plan was a bona fide plan for purposes of the statutory exception under the BC Code.

The BCLRB held that Arbitrator Peltz was incorrect in assessing whether the College’s age 65 cut-off in the LTD plan was “reasonably necessary to maintain the functionality and sustainability of the [LTD plan]”, as this was an application of the dissenting opinion in Potash rather than the majority. The BCLRB accepted the College’s argument that where an employer honestly believes a given plan was adopted without the intention of defeating protected rights, the Potash test does not require that honest belief to be measured against an objective standard that the employer’s belief is reasonable under the circumstances. Instead, the correct application of the Potash test involves a subjective analysis of the plan as a whole: “if the plan is legitimate, in the sense it is not a sham, that is the end of the [bona fide plan] analysis.”

According to the BCLRB, the 2024 award’s underlying rationale is that the College’s “reliance on financial considerations for the maintenance of the existing plan was unreasonable.” The BCLRB found that Arbitrator Peltz’s application of a Charter-values analysis brought his decision squarely within the dissent’s articulation of the Potash test. Arbitrator Peltz held that the statutory purpose of the BC Code’s exception is to guard against the destabilization of benefit plans (such as the College’s LTD plan), and found that there was no threat of destabilization based on the expert evidence regarding the actual cost of extending LTD benefits past age 65. The BCLRB pointed out that this “balancing analysis” on equality rights is an example of the type of analysis that the Potash dissent identified as lacking in the Potash test adopted by the majority of the SCC,; Arbitrator Peltz’s award “effectively echoes” the dissent in Potash and it is incorrect at law. Further, the BCLRB rejected the Association’s argument that the post-Potash caselaw supports the application of an objective proportionality assessment, and instead determined that the majority’s decision in Potash continues to be binding when interpreting the BC Code’s bona fide plan exception.

Arbitrator Peltz had also distinguished the College’s circumstances from the facts before the SCC in Potash, finding that the removal of mandatory retirement under the BC Code in 2008“effectively changed the framework” of the analysis. The BCLRB rejected this distinction, finding it “not supportable” as the BC Code has continued to exempt bona fide retirement, superannuation, pension and group or employee insurance plans since mandatory retirement’s elimination.

As noted above, the BCLRB remitted the matter back to Arbitrator Peltz, to determine whether s. 13(3)(b) of the BC Code is an unjustifiable infringement of the Charter’s s. 15 equality guarantee.

Takeaways

While this decision of the BCLRB in Okanagan College clarifies the proper application of the Potash bona fide plan test for purposes of the statutory exception to age discrimination under s. 13(3)(b) of the BC Code, the eventual outcome of the s. 15 Charter challenge could have broader significance to similar statutory exceptions to age discrimination found in human rights legislation across Canadian jurisdictions. If a Charter challenge to the statutory exceptions to age discrimination in benefits plans is successful in one Canadian jurisdiction, employers will face significant uncertainty regarding the continued application of age 65 cut-offs (or other similar distinctions) in benefits plans.

For more on this topic, see also, our FTR Now, 2025 Year in Review, which summarizes a similar decision in 2025, University Health Network (Toronto Western Hospital And Toronto General Hospital) v Ontario Nurses’ Association and our FTR Now regarding the Rayonier v Unifor, Locals 256 and 89 award.

To discuss the legal implications for your organization around age 65 cut-offs to LTD benefits and other pensions, benefits or Compensation matters, reach out to Natasha Monkman, Andrew Easto or another member of our team.

The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©