Drawing the Line at 65: Why Ontario’s Age Cutoff for Long-Term Disability Benefits Survived a Charter Challenge

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Introduction

It’s been more than 20 years since Ontario eliminated mandatory retirement in all aspects of employment. However, a grievance by the Ontario Nurses’ Association (“ONA”) challenged what has become an exception to the rule, alleged that ending long-term disability (“LTD”) benefits at 65 years old amounts to age-based discrimination that was contrary to Section 15 of the Canadian Charter of Rights and Freedoms.

In University Health Network (Toronto Western Hospital and Toronto General Hospital) v. Ontario Nurses’ Association, 2025 CanLII 47230, Arbitrator Eli Gedalof ultimately dismissed ONA’s grievance and held that while the carve-out did infringe Section 15 of the Charter, the limit was justified under Section 1. In other words, he confirmed that ending LTD benefits at age 65 is constitutionally permissible.

What Happened

The case arose after ONA, representing registered nurses at the University Health Network in Toronto, challenged the statutory framework that permits LTD benefits to terminate at the age of 65. ONA argued this amounted to age discrimination contrary to Section 15 of the Charter and could not be justified under Section 1.

When Ontario eliminated mandatory retirement, it failed to address or take into account that most insured employment benefit plans and insurance had historically been structured around a “normal retirement age” of 65. Despite eliminating mandatory retirement as an employer option, the Ontario legislature preserved a carve-out allowing those plans to maintain an age-based cutoff. This was intended to avoid destabilizing existing insurance arrangements while leaving scope for parties, including unions at the bargaining table, to negotiate changes.

The Arbitration

Section 15 of the Charter protects equality and prohibits discrimination, including on the basis of age. Both parties agreed that ending LTD coverage at 65 created an age-based distinction. The central question at arbitration was whether the age-65 carve-out could be justified under the Charter’s Section 1 limits analysis.

Under consideration was whether there was a rational link between the carve-out and the legislative intent to achieve its goal. Age 65 has been an important inflection point for retirement because most employees can access unreduced public and workplace pensions, among other supports, at that time. LTD is intended to replace employment income, which typically ends at retirement, so terminating LTD where retirement income becomes available fits the intended structure of an income replacement benefit, and how disability insurance was meant to function. The evidence in this case also supported the practical point that most nurses did retire by 65, and the carve-out would not wildly disrupt existing workplace benefit structures.

The more difficult issue was whether the measure impaired equality rights more than was necessary. LTD raises special practical difficulties: it is hard to predict who will still be working past 65 and then become disabled; the actuarial data for this cohort is limited. Further, extending LTD risked blurring the distinction between wage replacement and retirement income, as well as unintended cost and expense that could negatively impact other employees. The carve-out is narrowly focused in its effect, touching a relatively small cohort and leaving parties free to bargain for post-65 coverage, mitigated harm and managing costs, while preserving policy clarity.

Finally, the arbitrator weighed the overall balance of the measure. On proportionality, he found that the benefits of the carve-out outweighed its downsides. Few employees were directly affected, most had pension income available at 65 and the law preserved collective bargaining as a path to extended coverage. The measure is also less sweeping than the older mandatory-retirement exclusions considered in McKinney^[1] and, on balance, was treated as a reasonable, proportionate way to achieve the legislature’s objective.

Having completed the analysis, the arbitrator concluded that the carve-out, insofar as it applies to LTD, is saved under Section 1 of the Charter. He dismissed the grievance.

Takeaways

The decision confirms that, in Ontario, LTD coverage may lawfully end at age 65. Employers who maintain this cutoff are on firmer constitutional footing. The arbitrator’s analysis underscores that LTD is designed to provide income replacement only until retirement and not to function as a post-retirement income stream.

The ruling, however, is expressly confined to LTD. It should not be read as authorizing age-based distinctions in other benefits such as health, dental or life insurance, which raise different considerations. Employers who maintain such distinctions should continue to be guided by the reasoning in Talos^[2] and ensure that their plan designs are supported by clear evidence of cost, risk and plan viability.

The decision also leaves room for collective bargaining. The carve-out does not prohibit employers from offering post-65 disability coverage. Parties remain free to negotiate targeted extensions, such as shorter benefit periods, capped amounts or co-ordination with pension income. The point is that the law does not compel it.

Finally, the case highlights the importance of clear communication. Employees who plan to work beyond 65 should understand which benefits will continue and which will not, and how pensions interact with disability coverage. Transparent communication reduces misunderstandings and the risk of grievances.

The Workplace Law Group at Aird & Berlis LLP provides strategic labour advice to help employers navigate union-related challenges, from resisting certification to managing collective bargaining and arbitration. Please contact the authors or a member of the team if you have any questions or require assistance.