Turning Employees’ Golden Years into Gold for Employers

Golden Years employment | BCBusiness
Many Baby Boomers look to work past their retirement age, which could raise legal issues for employers.

As Baby Boomers hit retirement age, the issue of employees working into their Golden Years raises potential legal issues for employers.

Two thousand twelve marks the year the Baby Boomers start to turn 65. Due to improved health or poor returns on retirement investments, many Boomers are planning to work longer.

This poses both an opportunity and a challenge for employers. For those facing shortages of skilled labour, having workers who want to work longer, whether on a full-time or part-time basis, is good. For employers with employees who cannot meet their required performance, this is a challenge, particularly since human rights laws prohibit mandatory retirement. 

In a two-part blog, I’ll provide advice to employers on the opportunities and challenges of hiring older employees, or responding to employee requests to phase in their retirement.  

Employees wishing to gradually wind down their careers, or work for a new employer part time, can benefit employers in a number of ways besides simply filling vacancies. Older workers have a wealth of skills, and usually do not require the same training costs as younger, newer employees. Further, such employees can provide valuable training and mentoring resources themselves for other workers. 

When I advise my clients who want to hire older employees or agree to a gradual wind down for existing employees, I strongly recommend they put employment contracts in place before starting the new employment or modified work relationships. Key elements of these employment contracts are:

1. If you agree to an employee’s request for reduced responsibilities, it’s important to forge an agreement on any changes in salary, benefits, title or reporting structure. Otherwise, you’ll be vulnerable to constructive dismissal allegations, claims for severance and other damages.
2. Clearly state the company’s expectations for production targets so there is no misunderstanding about the company’s expectations, especially if you are implementing changes to an existing employee’s work schedule or responsibilities. Objective targets and expectations make it easier to measure employees’ performance, which is even more important when managing performance of older workers because those employees could claim they were victims of age-based discrimination.
3. Ensure the contract includes some provisions for a regular review of the employee’s performance, and whether any agreed modifications to an existing role are working. Regular communication on these matters increases the chances of a mutually successful relationship, and provides opportunities to identify and remediate problems. If termination does become necessary, documenting past issues during performance reviews will protect you from claims that those employees were subject to age-based discrimination.
4. Many employers mistakenly think Employment Standards laws dictate the maximum notice or pay in lieu of notice that applies when terminating an employee. In fact, those laws only set out minimum standards. Because common-law severance obligations and rights significantly increase if employees are 50 or older, severance can be very expensive. Thus, termination clauses that stipulate the notice or pay in lieu of notice an employee would receive if terminated is critical.
5. Put all agreements in writing, otherwise, disputes will inevitably arise. In my experience, if parties take the trouble to clearly document what was agreed to, they almost never have any misunderstandings or disputes over the terms. Also, written terms make it much more difficult for an employee to later claim the terms were different.
6. Get the contracts signed before new employment or modified work arrangements commence, as a condition of the company’s agreement to employment or changed terms of employment. Otherwise, if the company later needs to rely on a provision of the contract, the employee may be able to avoid those obligations by arguing there was no consideration for the agreed terms. 

Hiring older employees or agreeing to a phased-in retirement for an existing employee can result in significant benefits to employers. By managing the issues discussed, employers can have the benefits of experienced and flexible employees without the risks.  
 
 

This blog is written by Nicole Byres of Clark Wilson LLP and made available by BCBusiness to provide general information on employment law, and is not a substitute for competent legal advice from a lawyer licensed to practice in your jurisdiction. Neither the reading of this blog nor the sending of unsolicited comments or emails creates a lawyer-client relationship with the writer or Clark Wilson LLP.