Supreme Court ruling in RCMP pension case may force plan design changes
Last week’s Supreme Court of Canada ruling that the Royal Canadian Mounted Police pension plan discriminated against job-sharing women should be a wake-up call to pension administrators that changes in plan design to accommodate equality rights are long overdue.
“The negative pension consequences of job-sharing perpetuate 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,’” wrote Justice Rosalie Abella on behalf of the 6-3 majority.
The case involved three former RCMP officers who opted to job share and work reduced hours to spend more time with their children.
Read: How can employers help bridge the gender pension gap?
The Royal Canadian Mounted Police Superannuation Act calculates job-share hours as part-time hours. The act doesn’t allow part-timers to buy back into the pension plan, an opportunity afforded to other full-time employees who are absent without pay and return to their jobs.
The aggrieved officers — Joanne Fraser, Allison Pilgrim and Colleen Fox — claimed this policy offended their equality rights under the Charter of Rights. They argued that women dominated the group who had chosen the job-share option and urged that the hours they were away from work should be treated as leave without pay, giving them the opportunity to buy back into their pensions.
The SCC agreed the plan offended the Charter of Right’s equality provisions, but left the remedy to the government. “The methodology for facilitating the buy-back of pension credit is for the government to develop, but any remedial measures it takes should be in accordance with this Court’s reasons,” wrote Abella. “They should also have retroactive effect in order to give the claimants in this case and others in their position a meaningful remedy.”
Read: Judge rules RCMP pension doesn’t discriminate against parents
The practical impact is therefore unclear. “By leaving the remedy to the government, the decision remains vague as to which feature of the buy-back provision made it unconstitutional,” says Andrea Boctor, pension and benefits partner at Osler Hoskin & Harcourt LLP.
As the minority opinion pointed out, Fraser’s argument wasn’t that it was unfair in general to adjust pensions to account for periods of part-time work. Instead, her lawyer focused on the inability of job-sharers, mostly women, to buy back pensionable service in the same way as members who took leave without pay.
“If the discriminatory aspect was the former, the decision is broad and sweeping and will require many administrators to amend their plans to accommodate it,” says Boctor. “If it was the latter, it’s a simpler matter of matching options for all part-time workers regardless of their reasons for reducing their hours.”
The decision also suggests that courts will look at the sufficiency of any accommodation, as opposed to its reasonableness. “Administrators will have to grapple with this, as historically the courts haven’t sees their role as second-guessing the sufficiency of the accommodation,” says Boctor. “So it may no longer be a case of just doing something, but a matter of getting it right.”
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The retroactive aspect of the judgment could also be unwieldy. “It could have big implications in terms of funding for past liabilities,” she says.
What is clear is that at least one aspect of the decision will reverberate for years. “The majority’s framework tells you that there will be a problem even if the employer or sponsor doesn’t cause or intend to cause the discriminatory effect,” says Boctor. “The mere fact that it happens will create a problem.”
Mitch Frazer, a pension and employment partner at Torys LLP, notes it wasn’t incumbent on the RCMP to create a job-share program in the first place.
“As it turns out, something negative came out of that program. But the message is that if you’re a progressive employer and going to create work-life balance programs, make sure they don’t have disincentives for any group to take them up.”
Read: What work-life balance benefits do employees value most?