Ontario Regulation 286/01 – Benefit plans
O Reg 286/01 provides various exemptions from the prohibition in s. 44(1) of the Employment Standards Act, 2000 against age, sex and marital status and discrimination in benefit plans; certain limited types of age, sex and marital status discrimination are specifically allowed by O Reg 286/01.
References to spouse and marital status must be read to include same-sex spouses as well as opposite-sex spouses (whether married or common-law) and same-sex marital status as well as opposite-sex marital status (whether married or common-law).
Section 1 – Definitions
Section 1 of O Reg 286/01 provides definitions of various terms for purposes of Part XIII and the regulation only.
Each of the above terms are individually discussed below:
Actuarial basis
This term is used in O Reg 286/01 in the context of allowing certain differentiations that are "determined on an actuarial basis." It is defined as meaning the assumptions generally accepted and used by a Fellow of the Canadian Institute of Actuaries to establish the costs of benefits including the actuarial equivalents of such benefits, which costs depend upon certain contingencies such as rates of death, accident, sickness and disease, as well as interest rates, early retirement rates, salary scales and termination rates.
The policy of the Employment Standards Program is that a differentiation in a benefit plan is not "determined on an actuarial basis" merely because actuaries have "costed out" the benefits and contributions in the plan using generally accepted actuarial principles. Rather the Program holds that a differentiation is "determined on an actuarial basis" if the benefits or contributions involved are actuarially equivalent. For example, actuaries may determine that benefits in a pension plan are actuarially equivalent based on the relative remaining life expectancies of two employees retiring at different ages (e.g., an employee retiring at age 60 receives $800 a month and an otherwise similar employee retiring at age 65 receives $1,000 a month). Actuaries would determine that the total pay-outs to the two employees would be equivalent once life expectancy and other factors such as interest rates are considered.
Note: These examples are provided for illustration only. They are not necessarily actuarially sound.
Age
Age is defined as any age of 18 or more, but less than 65. Therefore, an employer may, for example, exclude employees from a plan on the basis that they are less than 18 or that they are 65 or older. The prohibition in s. 44 of the Employment Standards Act, 2000 regarding age differentiations applies only to employees and not to differentiations based on the age of the employees' dependants, spouses or survivors.
Benefits
This term is defined very broadly and includes both lump sum and periodic benefits. Furthermore, it includes benefits that are or will be received by the employee, his or her beneficiaries, survivors or dependants. Therefore, a violation may occur where a plan contains provisions discriminatory on the basis of age, sex or marital status of the employees, regardless of whether any action has been taken pursuant to those provisions. (But see discussion of the definition of "employer" above.) Generally, the definition in the regulation includes amounts accrued or payments to which the employee is entitled under a pension plan, retirement plan or life, health, dental or disability insurance plan.
Dependant
Dependant is defined by reference to the definition contained in the relevant benefit plan. But the creators of the plan do not have a carte blanche to define the term in absolutely any way they choose; the purposes of the Act and in particular the purposes of the prohibition in s. 44 limit the freedom to define. Thus, the definition cannot make a distinction on the basis of age, sex or marital status of the employees. (In other words, dependent children of married employees must be treated the same as dependent children of single employees.) Further, the definition cannot purport to give the term "dependent" a meaning that is in conflict with its ordinary or commonly understood sense.
Disability benefit plan
This provision defines a disability plan and includes both short-term disability plans (payable for less than 52 weeks) and long-term disability plans. Some pension plans will contain a benefit called a "disability pension". It is important to determine whether such a plan is a pension or a disability plan within the meaning of O Reg 286/01, since different exemptions apply to the two types of plans. In order for a "disability pension" to be considered a pension plan, it must be evident that the disability benefit is part of or ancillary to a pension plan, and that the disability benefit is payable on the employee's retirement or termination of employment.
Former Act
References in this Regulation to "former Act" are defined to mean the former Employment Standards Act, RSO 1990, c E.14.
Health benefit plan
This definition includes benefits such as dental plans and plans that pay some or all of the costs associated with such things as prescription medications, massage, physiotherapy or chiropractic treatments, hearing aids, prosthetic limbs, etc.
Life insurance plan
This definition states that a life insurance plan is one that provides a death benefit, whether payable periodically or as a lump sum, to the employee's beneficiary, survivor or dependant, and includes dismemberment insurance, which is payable for loss of limbs.
Long-term disability benefit plan
This term is defined to include any disability benefit plan under which benefits may be paid for a period of not less than 52 weeks, or until recovery, retirement or death, whichever is the lesser.
Marital status
This term would apply to persons who are legally married (whether to a person of the same or opposite sex) but is also defined to include single, unmarried parents who are supporting dependent children and persons in a common law relationship as that relationship is defined in the benefit plan. However, the creators of the plan do not have a carte blanche to define the term in absolutely any way they choose; the purposes of the Act and in particular the purposes of the prohibition in s. 44 and the reference to common law relationships in the "marital status" definition itself impose some limit on the freedom to define. Since one of those purposes was to prevent discrimination against employees in common law spousal relationships in employer-provided benefit plans, a plan definition cannot purport to define "common law status" in such a way as to effectively exclude persons in what would ordinarily be understood to be in a common law spousal relationship from the protection of the prohibition.
Since the Ontario Court of Appeal decision in Halpern v Canada (Attorney General), 2003 CanLII 26403 (ON CA), in which the Court ruled that the exclusion of same sex couples from marriage was inconsistent with the equality guarantees in the Canadian Charter of Rights and Freedoms, was not saved by s. 1 ("reasonable limits") and was, therefore, unconstitutional, "common law status as defined in the relevant benefit plan" must include same-sex as well as opposite-sex common law couples.
Based on the common elements of definitions of "spouse" which appear in many Ontario statutes, the Employment Standards Program has adopted a policy under which persons are considered to be common law spouses if they are not legally married to each other and have been living together in a conjugal relationship continuously for a period of not less than three years, or living together in a conjugal relationship of some permanence if they are the natural or adoptive parents of a child. The employer may, of course, adopt a more liberal definition of common law spouse than the one set out in this interpretation.
Any exemptions from Part XIII for employees on the basis of marital status must be applied to legally married employees whether married to someone of the same or opposite sex, to employees in common law marriages (with reference to the above-noted definition and whether in a relationship with a person of the same or opposite sex) and to single, unmarried employees supporting a dependent child or children. Alternatively, if a benefit plan is provided to married employees (which includes legal and common law marriages), it must also be provided to single, unmarried employees supporting dependent children.
Normal pensionable date
This is defined as the date on which an employee can retire and receive a regular (i.e., full) pension as provided in the plan. The normal pensionable age can be determined with reference to age or to years of service.
Pension plan
A pension plan is defined very broadly to include a plan that provides benefits upon retirement (e.g., a superannuation plan) or termination to an employee or his or her spouse or dependant. The definition continues to specifically include various types of pension plans, such as:
- Unit benefit plan: an example of this would be a plan that would provide a pension of 60 per cent of the average of the employee's final five years of earnings;
- Defined benefit pension plan: for example, a plan that provides $1,000 a month in benefits after 25 years of service;
- Money purchase pension plan: where the employer and/or the employee agree to contribute a specified amount to the plan and the benefits are determined with reference to the assets in the plan; this is also known as a defined contribution plan;
- Profit sharing plan: a form of defined contribution plan where the employer contributes to the plan amounts that are calculated in accordance with the profits of the business; the benefits are determined with reference to the assets in the plan; and
- Composite pension plan: a combination of any or all of the above types of pension plans.
It should be noted that some types of pension plans are included in the O Reg 286/01 definition but are not pensions for purposes of the Pension Benefits Act, RSO 1990, c P.8. These types of pensions are:
- A profit sharing plan;
- A group RRSP;
- An "employee pay all" plan where the employer makes no contributions; and
- A retiring allowance as defined in the Income Tax Act, RSC 1985, c 1 (5th Supp).
Sex
As noted in the discussion of s. 44 of the Act, sex is defined as including a distinction based on pregnancy and distinctions based on whether an employee is the head of a household or a primary wage earner.
Short-term disability benefit plan
This term is defined to include any disability benefit plan that does not meet the criteria set out in the regulation for a "long-term disability benefit plan" (i.e., a plan under which benefits are payable for a period of at least 52 weeks or until recovery, retirement or death, whichever period is shorter. (See the definition of "long-term disability plan" above.)
Spouse
This term is defined with reference to the definition of "spouse" contained in a relevant benefit plan. However, the creators of the plan do not have a carte blanche to define the term in absolutely any way they choose; the purposes of the Act and in particular the purposes of the prohibition in s. 44 and the reference to common law relationships in the "marital status" definition impose some limit on the freedom to define. Since one of those purposes was to prevent discrimination against employees in common law spousal relationships in employer-provided benefit plans, a plan definition cannot purport to define "spouse" in such a way as effectively to exclude persons in what would ordinarily be understood to be a common law spousal relationship from the protection of the prohibition.
Since the Halpern v Canada (Attorney General) decision, "spouse as defined in the relevant benefit plan" must include persons in same-sex as well as opposite-sex relationships.
Based on the common elements of definitions of "spouse" which appear in many Ontario statutes, the Employment Standards Program has adopted a policy under which persons are considered to be common law spouses if they are not legally married to each other and living together in a conjugal relationship continuously for a period of not less than three years, or living together in a conjugal relationship of some permanence if they are the natural or adoptive parents of a child. The employer may, of course, adopt a more liberal definition of common law spouse than the one set out in this interpretation.
Voluntary additional contribution
This is a voluntary contribution that an employee may make to his or her pension plan without obliging the employer to make a corresponding contribution.
Section 2 – Pension plans, permitted differences re employee’s sex
Pension plans, permitted differentiation re employee's sex - s. 2(1)
Section 2(1) of O Reg 286/01 allows employers to differentiate on the basis of sex in contributions to a pension plan if two requirements are met:
- The differentiation is made on an actuarial basis; and
- The differentiation is made in order to provide equal benefits.
Actuarial tables indicate that women, as a group, tend to live longer than men; because of this, if male and female employees are to be provided by the employer with equal monthly (or other periodic) pension benefits, the employer will have to make greater contributions to the pension plan in respect of female employees than it will have to make in respect of male employees. The exemption allows this to the extent that actuaries have determined that it is necessary to do in order to equalize pension benefits as between male and female employees.
Application of s. 44(1), employment prior to 1987 - s. 2(2)
This is a transitional provision designed to prevent the retroactive application of the current exemptions contained in s. 2 of O Reg 286/01 to Pension Benefits Act, RSO 1990, c P.8 ("PBA") plans, insofar as pre-1987 employment is concerned. It must be read in conjunction with s. 2(4), which effectively defines "differentiation" for purposes of s. 2(2) [and also s. 2(3)] as a differentiation that was permitted under the version of the Employment Standards Act that existed in the 1980s by the benefits regulation RRO 1980, Reg 282 prior to the amendment of that regulation in 1988.
The effect of s. 2(2) is that the exemptions from the prohibition against discrimination on the basis of sex previously set out in s. 2 of the former RRO 1980, Reg 282, prior to its amendment by O Reg 443/88, continue to apply to pension plans governed by the PBA insofar as pre-1987 employment is concerned, except where such employment was covered by the PBA's own sex discrimination provisions, contained in ss. 52(3)(b) and (c) of the PBA. The PBA's sex discrimination provisions cover post-1986 employment, but also cover pre-1987 employment if it is dealt with in pension plans established after 1986 or in plan amendments made after 1986.
Application of s. 44(1), employment before July 12, 1988 - s. 2(3)
This is a transitional provision designed to prevent the retroactive application of the current exemptions contained in s. 2 of O Reg 286/01 to plans to which the PBA does not apply, insofar as employment before July 12, 1988, is concerned. Plans not covered by the PBA include profit sharing plans, group registered retirement savings plans, "employee pay all" plans and "retiring allowances" as defined in the Income Tax Act, RSC 1985, c 1 (5th Supp). Like s. 2(2), s. 2(3) must be read in conjunction with s. 2(4), which effectively defines "differentiation" for the purposes of s. 2(2) [and also s. 2(3)] as a differentiation that was permitted under the version of the Employment Standards Act, RSO 1980, c 137 that existed in the 1980s by the benefits regulation RRO 1980, Reg 282 prior to the amendment of that regulation in 1988.
This means that exemptions from the prohibition against discrimination in pension plans on the basis of sex set out in s. 2 of the former RRO 1980, Reg 282 (prior to its amendment by O Reg 443/88) continue to apply to pension plans not governed by the PBA in regards to differentiation in those plans on the basis of sex insofar as pre-July 12, 1988, employment is concerned. Note that even though an employer makes a contribution or pays a benefit on or after July 12, 1988, it will be subject to the old rules regarding sex discrimination to the extent that it relates to employment prior to July 12, 1988.
Differentiation - s. 2(4)
This section defines "differentiation" for purposes of ss. 2(2) and 2(3) of O Reg 286/01 only. "Differentiation" then means the types of differentiations on the basis of sex, in pension plans, permitted by the predecessor to s. 2 of RRO 1980, Reg 282 under the former Employment Standards Act, RSO 1980, c 137. That predecessor provision read as follows:
Subsection 34(2) of the version of the Employment Standards Act, RSO 1980, c 137 is a predecessor provision to s. 33(2) of the Employment Standards Act, RSO 1990, c E.14 and to s. 44 of the Employment Standards Act, 2000.
Section 3 — Pension plans, permitted differentiation re marital status
Pension plans, permitted differentiation re marital status - s. 3(1)
O Reg 286/01 permits three types of differentiation on the basis of marital status in pension plans:
- Increased benefits payable to employees with dependent spouses.
- The payment of joint and survivor pensions to employees and their spouses. A "joint and survivor pension" is a pension that is payable as long as either of the two spouses is alive. This type of pension is now required by the Pension Benefits Act, RSO 1990, c P.8 ("PBA") under the circumstances described in s. 3(3) of O Reg 286/01. This exemption is not applicable if the plan contravenes the PBA's provisions regarding joint and survivor pensions.
- Employer contributions to a defined benefit or unit benefit pension plan that differentiate because of marital status where the differentiation is made in order to provide increased benefits to employees because of their "marital status", because they have a spouse or, are unmarried but supporting in whole or part a dependent child or children.
- See the discussion of the definition of "marital status", which includes the condition of being an unmarried person who is supporting in whole or part a dependent child or children, at s. 1(j) of O Reg 286/01. This exemption is not applicable to increased employer contributions to a money purchase or profit sharing pension plan.
Commuted benefits - s. 3(2)
The exemption in s. 3(1)(b) for joint and survivor pensions only applies if the pension benefit is payable periodically, that is, in regular instalments rather than in a lump sum. However, s. 3(2) is a "de minimis" provision which states that the exemption in s. 3(1)(b) will still apply if the amount is "commuted", that is, converted to one lump sum in a situation where the periodic payments would otherwise be very small. The benchmark figure used for commutation is that the annual benefit, before commutation, must be not more than two per cent of the Year's Maximum Pensionable Earnings ("YMPE"), as defined in the Canada Pension Plan, in the year that the employee terminated his or her employment. The YMPE is raised each year according to the cost of living.
When prohibition does not apply - s. 3(3)
This section provides that the exemption in s. 3(1)(b) of O Reg 286/01 from the prohibition against marital status discrimination in s. 44(1) of the Employment Standards Act, 2000 does not apply if the pension plan contravenes the provision of the PBA regarding joint and survivor pensions. Section 44 of the PBA provides, subject to certain limited exceptions, that if the employee has a spouse on the date the first instalment of the pension becomes due, and is not living separate and apart from that spouse, the pension must be a joint and survivor pension, payable as long as either spouse is alive. The value of the pension payable to the surviving spouse must not be less than 60 per cent of the pension paid to the employee.
Spouse is defined in the PBA as two persons who:
- Are legally married to each other or who are not married to each other but who either have been living together in a conjugal relationship continuously for not less than three years; or
- Have been living together in a conjugal relationship of some permanence, if they are the natural or adoptive parents of a child.
Section 4 – Pension plans, permitted differentiation re employee’sage
Pension plans, permitted differentiation re employee's age - s. 4(1)
Sections 4(1)(a)-(e) allows certain age differentiations in pension plans if those differentiations are determined on an actuarial basis. The term "actuarial basis" is defined in s. 1 of O Reg 286/01 as the assumptions used by actuaries to establish the costs of various benefits, including the actuarial equivalents of those benefits, with reference to contingencies such as death, accident, sickness or disease. See the discussion of the definition of the term "actuarial basis" at s. 1(a) of O Reg 286/01 for further information.
It is the policy of the Program that a differentiation in a pension plan is determined on an actuarial basis if the differentiation in contributions to, or benefits paid, under the plan are actuarially equivalent. Assumptions generally used by actuaries with respect to pension plans are set out in the Survey of Actuarial Assumptions and Funded Status, as follows:
- Interest;
- Salary scale;
- Yearly Maximum Pensionable Earnings increase (this is an annual figure determined under the Canada Pension Plan);
- Retirement age;
- Disability rate;
- Termination rate; and
- Mortality rate.
Section 4(1)(a)-(e), therefore, allows five types of age differentiations in a pension plan if these differentiations are "determined on an actuarial basis":
- Differentiations in the rate of voluntary additional contributions of an employee to a pension plan.
"Voluntary additional contribution" is defined in s. 1 of O Reg 286/01 as a voluntary contribution that an employee may make to a pension plan without obligating the employer to make a corresponding contribution.
- Differentiations in the rates of mandatory employee contributions to a money purchase or profit sharing pension plan.
The exemption refers to contributions that are mandatory once the employee is enrolled in the plan. It does not refer to "required" contributions in the sense that enrolment in the plan is compulsory.
- Differentiations in employer contributions to a unit benefit or defined benefit pension plan unless the plan is governed by the Pension Benefits Act, RSO 1990, c P.8 ("PBA") and the plan contravenes the provisions of that Act regarding age differentiation.
This exemption is therefore conditional on the plan complying with the PBA's provisions regarding age differentiation. The major provisions of the PBA in this regard are:
- Section 31 - membership in a plan is available after two years' continuous employment (age no longer a factor);
- Section 35(1) - the normal retirement age shall not be more than 66;
- Section 35(4) - an employee who continues to work past the normal retirement date may, subject to certain "age-neutral" caps, continue to accrue benefits until actual retirement (age is no longer a factor);
- Section 37 - a deferred pension entitlement is created after two years' membership in the plan (age is no longer a factor, except with respect to benefits accrued prior to 1987).
- Differentiations in employer contributions to a money purchase or profit sharing pension plan when the employer is switching from a unit-benefit or defined benefit plan, if the differentiations are to protect employees' pension benefits from being adversely affected by the transfer.
There is an increasing trend to defined contribution plans, in which the employer agrees to a certain level of contributions rather than to paying a certain level of benefits. When switching from a unit-benefit or defined benefit to a defined contribution plan, it may be necessary for the employer to make a one-time, lump sum "top-up" to the credit of older employees, to prevent their pensions from being adversely affected by the transition. The exemption allows this differentiation provided that the "top-up" has been actuarially calculated.
- Differentiations in pension benefits, provided that if the PBA applies to the plan, the differentiations are permitted by the PBA.
This exemption allows age differentiations in non-PBA pension plans if they are determined on an actuarial basis, and age differentiations in PBA plans if they are determined on an actuarial basis and not in contravention of the PBA's provisions regarding age differentiation. The major provisions of the PBA regarding age differentiation are set out above, in the discussion of s. 4(1)(c).
Transitional provision - s. 4(2)
This is a transitional provision designed to ensure that the requirement that age differentiations in pension plans be determined on an actuarial basis (which came into effect on July 12, 1988) does not have retroactive effect. Therefore, age differentiations set out in s. 4(1)(a), (b) and (e) need not be determined on an actuarial basis if they relate to that portion of the employee's employment that occurred before July 12, 1988. The provision that corresponded to s. 4(1)(c) in the benefits regulation in force prior to July 12, 1988, already required that particular differentiation to be on an actuarial basis, so it was not necessary to include this section in the transitional provision. Section 4(1)(d) is not included in the transitional provision because it did not introduce any new constraint, but simply assisted the employer in preserving the "status quo" when switching from one type of plan to another.
Application of s. 44(1) - s. 4(3)
This exemption to the general prohibition against age differentiations in pension plans under s. 44(1) of the Employment Standards Act, 2000, unlike the exemptions created in s. 4(1) of O Reg 286/01, is not based on actuarial equivalents. Section 4(3) allows a differentiation based on age in a pension plan if the plan allows for voluntary retirement before the age of 65. Without this section, a pension plan in which contributions or benefits varied in accordance with an early (voluntary) retirement age of 60, for example, would not be permissible unless the differentiation was determined "on an actuarial basis". It is important to note that this exception only applies to voluntary retirement, not to mandatory retirement. Furthermore, in the case of PBA plans, the exception only applies if the plan does not contravene the provisions of the PBA regarding normal retirement dates and early retirement pensions. The PBA provisions regarding normal retirement dates are found in s. 35 of the PBA, which provides that the normal retirement date shall not be later than the date on which the employee reaches age 66, and that an employee who works past the normal retirement date may be entitled to continue to accrue benefits until actual retirement, subject to any limits on service credits or benefit amounts set out in the plan. The PBA provisions regarding early retirement are found in s. 41 of the PBA, which provides that an employee who is within 10 years of attaining the normal retirement date and terminates employment after 1987, and has been a member of the plan for at least two years, is entitled to elect to receive an early retirement pension.
Section 5 – life insurance plans, permitted differentiation re Employee’s sex
Section 5 of O Reg 286/01 provides that s. 44(1) of the Employment Standards Act, 2000 does not apply to two types of differentiation made on the basis of sex in a life insurance plan.
Differentiations in employee contributions - s. 5(a)
Section 5(a) allows a differentiation in respect of employee contributions to a voluntary employee-pay-all life insurance plan, where the differentiation is determined on an actuarial basis. According to current actuarial tables, women tend to live longer than men. Therefore, life insurance premiums are higher for men than for women of the same age (because men are likely to die earlier and, therefore, with a fewer number of premiums having been paid on their behalf). The exemption in s. 5(a) allows for actuarially-based differentiations in life insurance plans in which participation by the employee is voluntary and in which the employee pays all of the premiums. Therefore, such plans may have greater contribution rates for male employees than for female employees, if the difference is determined according to the actuarial tables.
Differentiations in employer contributions - s. 5(b)
Section 5(b) allows differentiations in respect of employer contributions to a life insurance plan where the differentiation is based on sex if it is made on an actuarial basis and in order to provide equivalent benefits. This type of differentiation might be made where the employer wishes to ensure that male and female employees receive the same life insurance benefits.
Section 6 – Life insurance plans, permitted differentiation re marital status
Life insurance plans, permitted differentiation re marital status - s. 6(1)
Section 6(1) provides that the prohibition against differentiation in s. 44(1) of the Employment Standards Act, 2000 does not apply to three types of differentiations made on the basis of marital status in a life insurance plan.
Benefits payable to surviving spouse - s. 6(1)(a)
Section 6(1)(a) states that benefits under a life insurance plan that are payable periodically to the surviving spouse of a deceased employee are exempt from the prohibition against differentiations on the basis of marital status in s. 44(1) of the Act. This exemption applies where the benefits are to the deceased employee's surviving spouse for his or her life, or until he or she becomes the spouse of another person. Also see s. 6(2) of O Reg 286/01, discussed below, which provides that this provision also applies to benefits of less than $25/month that have been commuted to a lump sum benefit.
Benefits payable to employee on death of spouse - s. 6(1)(b)
Section 6(1)(b) provides that a life insurance plan may differentiate on the basis of marital status where the plan provides for benefits payable to an employee upon the death of his or her spouse. The purpose of the exemption is to allow an employee to insure his or her spouse's life through the employer's plan.
Differentiations in employer or employee contributions - s. 6(1)(c)
Section 6(1)(c) permits a life insurance plan to differentiate on the basis of marital status with respect to employer or employee contributions where the plan provides periodic benefits to the surviving spouse of the employee. This means that a plan may have higher employer or employee contributions in order to provide periodic survivor benefits to a deceased employee's spouse.
This exemption has no "life-time or until the person becomes a spouse" condition, and it does not have a commutation exclusion for small amounts - see s. 6(2) of O Reg 286/01, below. This exemption could apply in respect of contributions to any plan that provided for a periodic life insurance benefit payment, of any duration, to the employee's surviving spouse.
Differentiations not allowed under s. 6(1)
The following are examples of provisions that would not be permissible in a life insurance plan, because they discriminate on the basis of marital status and are not exempted by s. 6(1):
- A provision stating that a medical examination is not necessary if optional insurance is elected within 60 days of marriage;
- A plan that provides for single employees' lump sum life insurance equal to two times salary, but for employees with a spouse one times salary plus a periodic survivor insurance income benefit. The survivor income benefit would be permissible under s. 61(a), but the differentiation in lump sum benefits on the basis of marital status would not be permissible.
Commuted benefits - s. 6(2)
Section 6(2) states that the benefits under an insurance plan described in s. 6(1)(a) will be deemed to be payable periodically, notwithstanding that they have been commuted to a lump sum and would have been less than $25 a month if they had not been commuted. Commutation involves the transformation of periodic benefits into one lump sum benefit. It is done by determining the current "lump sum" value of the periodic payments, using actuarial assumptions respecting such matters as life expectancy and interest rates.
Section 7 – Life insurance plans, permitted differentiation re age
Differentiations in benefits or employee contributions (voluntary employee-pay-all plans only) - s. 7(a)
Section 7(a) provides that a voluntary, employee-pay-all life insurance plan (i.e., a plan where the employees may choose to participate but to which the employer does not make any contributions) may differentiate between employees on the basis of age on an actuarial basis with respect to both benefits and contributions. In other words, such a plan may provide benefits or require contributions that vary on an actuarial basis according to age. For example, the employee may contribute $100 a year toward his or her life insurance and receive benefits that vary on an actuarial basis according to his or her age. Alternatively, such a plan could provide $50,000 in insurance for each employee and the employees' contributions would vary on an actuarial basis according to their age.
Differentiations in employer contributions - s. 7(b)
Section 7(b) provides that employer contributions to a life insurance plan may differentiate with respect to an employee's age if the differentiation is made on an actuarial basis in order to provide equal benefits under the plan. As a result, an employer may make increased contributions for older employees, provided these increases are based on actuarial tables, in order to provide an actuarially equivalent life insurance benefit under the plan to all employees.
Example of differentiation not allowed Under s. 7
An example of a provision that would not be permissible in a life insurance plan, because it differentiates on the basis of age and is not exempted by s. 7 would be a provision in an employer-funded plan that provides a lump sum survivor benefit that varies in amount according to the number of years left to normal retirement age at the time of the employee's death.
Section 8 – Disability benefit plans, permitted differentiation re age, sex or leave of absence
Section 8 allows two types of differentiations in disability insurance plans.
Differentiation in employee contributions in voluntary employee-pay-all plans - s. 8(a)
Section 8(a) allows a disability plan that is a voluntary, employee-pay-all plan, to differentiate in employee contributions on the basis of age or sex, on an actuarial basis. The purpose of the exemption is to permit this kind of plan to provide for increased contributions by employees in age or sex categories associated with higher disability insurance premiums. It is important to note that the exemption in s. 8(a) does not allow for a differentiation in benefits in such a plan, unlike the corresponding exemption for voluntary employee-pay-all life insurance plans in s. 7(a) of O Reg 286/01.
Differentiation in employer contributions - s. 8(b)
Section 8(b) allows a disability plan to differentiate in the rate of employer contributions to the plan on the basis of age or sex, on an actuarial basis, in order to provide equal benefits under the plan. (This exemption is similar to the corresponding exemption created in s. 7(b) with respect to life insurance plans.) In other words, where the employer provides a disability plan for which the employer makes contributions, the employer may make increased contributions for employees of a certain age or sex, provided that it results in the employees receiving actuarially equivalent benefits under the plan.
Former exemption respecting female employees on leave
Section 8(c) of RRO 1990, Reg 321 under the former Employment Standards Act contained the following provision:
This provision explicitly permitted a benefit plan to deny disability benefits to a female employee on pregnancy or parental leave or on a leave that constituted a "greater benefit" than a leave under Part XI of the former Employment Standards Act.
The provision thus provided an exception to the prohibition against discrimination in the provision of benefits plans on the basis of sex, by allowing disability plans to deny short-or long-term benefits to female employees on pregnancy and parental leave.
In Brooks v Canada Safeway Ltd., [1989] 1 SCR 1219, 1989 CanLII 96 (SCC), a 1989 case decided under Manitoba human rights legislation, the Supreme Court of Canada held that because discrimination on the basis of pregnancy is discrimination on the basis of sex, it is discriminatory to deny women short-term or long-term disability benefits during that portion of a leave that they are unable to work for reasons related to pregnancy and childbirth, as these constituted valid health-related reasons for absence from work. As a result, it would constitute discrimination on the basis of sex to deny a female employee disability benefits for that part of the leave.
As s. 8(c) of the former RRO 1990, Reg 321 may have been perceived as inconsistent with the Supreme Court of Canada's reasoning in Brooks v Canada Safeway Ltd., no corresponding provision was incorporated into O Reg 286/01.
The position of the Employment Practices Branch is that where a disability benefit plan is provided by or through the employer, the reasoning in Brooks v Canada Safeway Ltd. will apply so as to give a female employee who is on pregnancy or parental leave a right to short-term or long-term disability benefits during that portion of her leave in which she is unable to work for reasons of health related to pregnancy or childbirth. (Note, however, that where an employer provides disability benefits to employees on leaves other than Part XIV leaves, s. 10 of O Reg 286/01 will apply to require that such benefits be provided to both female and male employees on a Part XIV leave and for the entire period of the leave.)
For other court decisions respecting the right to disability benefits for female employees during the "health-related" portion of a pregnancy leave, see Alberta Hospital Association v Parcels, 1992 CanLII 6106 (AB QB) and O.S.S.T.F., District 34 v Barton (1996), 91 OAC 253 (ON SC).
Section 9 – Health benefit plans, permitted differentiation re sex or marital status
Differentiation in employee contributions on the basis of sex (voluntary employee-pay-all plans only) - s. 9(a)
Section 9(a) allows a health benefit plan in which participation is voluntary and to which the employer does not contribute to set employee contribution rates that vary on an actuarial basis because of sex. Note that the exemption does not allow the benefits to vary according to sex.
Differentiation in employer contributions on the basis of sex - s. 9(b)
Section 9(b) allows a health benefit plan to set employer contribution rates that vary on the basis of employees' sex if such differentiations are made on an actuarial basis in order to provide equal benefits. In other words, this exemption allows an employer's (but not an employee's) contribution rates to vary on the basis of sex if the contribution rates are calculated according to actuarial tables.
Differentiation in benefits and employee contributions on the basis of marital status - s. 9(c)
Section 9(c) allows employers to provide a health benefit plan that differentiates in benefits or employee contributions on the basis of marital status, in order to provide benefits to the employee's spouse or dependent child. However, it would be a violation of Part XIII if the plan made a distinction between employees with marital status. For example, this exemption does not allow an employer to provide a health benefit plan that pays benefits for the health expenses of the children of employees with a spouse but not the children of single employees (who are defined as having marital status under O Reg 286/01).
Differentiation in employer contributions on the basis of marital status - s. 9(d)
Section 9(d) allows a differentiation in a health benefit plan with respect to employer contributions where there are specified premium rates for employees having marital status and different premium rates for employees without marital status, and the differentiation in the employer contributions is on the same proportional basis.
An example of this type of agreement would be an extended health plan where single employee coverage costs $X a month, but family coverage costs $Y a month, a higher amount. Provided that the employer's subsidy is proportionally the same, i.e., 50 per cent of X and 50 per cent of Y, it will not be in violation of s. 44 of the Employment Standards Act, 2000 despite the fact that the employer is contributing more in terms of dollars and cents on behalf of the employees who have marital status.
Examples of differentiations not allowed under s. 9
A health benefit plan may not discriminate on the basis of age, sex or marital status, except as provided in s. 9 of O Reg 286/01. Some examples of discrimination in a health benefit plan that would not be permitted are:
- A provision excluding reimbursement for the cost of birth control pills for female employees. However, if a male birth control pill were available, it would not be a violation of Part XIII if neither male nor female employees were covered for birth control pills;
- A provision discriminating between employees on the basis of age in benefits or contributions; and
- A provision denying extended health benefits to female employees with spouses but not to male employees with spouses (on the theory, say, that many female employees have husbands who work and who could obtain family coverage under their employer's plans).
Section 10 – Participation in benefit plan during leave of absence
Section 10 provides that if employees on a leave other than a leave under ESA Part XIV, e.g., educational leave, are entitled to participate in a benefit plan, then employees on a leave under Part XIV (i.e., pregnancy, parental, family medical, family caregiver, organ donor, critical illness, personal emergency , child death, crime-related child disappearance, domestic or sexual violence, declared emergency or reservist leave), or on any longer leave of absence that constitutes a greater benefit under ESA Part III, s. 5(2) must be entitled to participate in the plan.
Under ESA Part XIV, ss. 51(1), (2) and (3), an employee on any type of Part XIV leave, except reservist leave (i.e. pregnancy, parental, family medical, family caregiver, organ donor, personal emergency, domestic or sexual violence, critical illness, child death, crime-related child disappearance or declared emergency leave) already has the statutory right to continue to participate in pension plans, life insurance plans, accidental death plans, extended health plans and dental plans during the leave. Section 10 therefore is redundant to these types of plans with respect to employees on pregnancy, parental, family medical, family caregiver, domestic or sexual violence, critical illness, organ donor, personal emergency, child death, crime-related child disappearance or declared emergency leave because employees on such leaves have a right under the ESA 2000 to participate in them even if employees on other types of leave do not.
However, the rules are different with respect to reservist leave. An employee on reservist leave does not have the “automatic” right under the ESA 2000 to participate in pension plans, life insurance plans, accidental death plans, extended health plans and dental plans during their leave. However, where an employer provides other types of benefit plans other than the plans enumerated in ESA Part XIV, s. 51(2), to employees on a leave other than a leave under Part XIV (e.g., education leave), then s. 10 would operate to entitle employees on a reservist leave to participate in those other plans.
Undoubtedly, the most important type of benefit plan not mentioned in ESA Part XIV, s. 51 is a disability benefit plan. Note that s. 51 also refers to "prescribed" types of benefit plans prescribed by the regulations but no other types of benefit plans have been prescribed. However, it should be noted that the Employment Practices Branch takes the position, based on the Supreme Court of Canada decision in Brooks v Canada Safeway Ltd., [1989] 1 SCR 1219, 1989 CanLII 96 (SCC), that where a disability benefit plan is provided by or through the employer, a female employee who is on pregnancy or parental leave will have a right to short-term or long-term disability benefits during that portion of their leave in which they are unable to work for reasons of health related to pregnancy or childbirth.
Section 11 – Former exclusion from certain benefit plans
This section applies to an employee who was excluded from participation in a benefit plan by reason of a provision in the plan that became impermissible on November 1, 1975, the date when Part X of the Employment Standards Act, 1974, SO 1974, c 112, the original predecessor to Part XIII, came into force. Under s. 11, such an employee is entitled to participate in the plan from the time that the predecessor began to apply to the plan.
Section 12 — Compliance not to be achieved by reductions
Section 12 states that no employer may reduce either its contributions to or employee benefits under a plan in order to comply with Part XIII and O Reg 286/01 or Part X of the former Employment Standards Act and its related regulations or its predecessors. This is similar to the provision in s. 42(3) of the Employment Standards Act, 2000, which prohibits an employer from reducing the pay of an employee in order to comply with the equal pay provisions of the Act. An example of a reduction prohibited by s. 12 of O Reg 286/01 would be where the employer reduced the benefits of male employees under a health insurance plan to those received by females, instead of increasing the benefits paid to females, in order to provide equal benefits to male and female employees.
Section 13 – Change to normal pensionable date under certain plans
This section states that where an employee has his or her normal pensionable rate increased in order to comply with the original predecessor to Part XIII of the Employment Standards Act, 2000, the employee shall be entitled to his or her pension benefits on the normal pensionable date as it was before it was increased. An example of the type of situation that this provision was meant to address would be a pension plan that, prior to November 1, 1975, had a normal pensionable date of the day on which the employee reached age 60 for females and a normal pensionable date of the day on which the employee reached age 65 for males. In order to comply with the predecessor to Part XIII when it first became law, the plan might have been amended to provide a normal pensionable date of the day on which the employee reached age 65 for both males and females. However, according to s. 13, the females in such a plan would retain the option to retire at age 60 with a full pension. Section 13 must, however, be read as subject to the Pension Benefits Act, RSO 1990, c P.8, which prevails over other legislation in the event of a conflict and which, subject to certain exceptions, prohibits differentiation on the basis of sex in a pension plan.