Employers Beware – Attempting to Address Systemic Inequality is Not Enough

03. November 2020 0

In Fraser v. Canada (Attorney General), 2020 SCC 28, the Supreme Court of Canada considered an allegation of “adverse impact” discrimination where an apparently neutral pension plan had a disproportionate impact on female RCMP members with children. The court’s broad interpretation of the equality rights in section 15 of the Charter has potentially far-reaching implications for public and private sector workplaces and beyond.

  • This case involved a government employer and the application of the Canadian Charter of Rights and Freedoms. However, the Supreme Court of Canada’s decisions in “Charter” cases often have an influence on the meaning of “equality” in subsequent provincial human rights cases. This means the decision has implications for private sector employers across the country.
  • The majority’s decision suggests that employer policies, which attempt to address systemic inequality could be attacked as discriminatory if they do not sufficiently address the systemic inequality. This may hinder some progressive employers from taking such steps.

The competing reasoning of the justices demonstrates the differences in opinion onin the application of the Charter provisions protecting equality.

Factual background

The claimants are three retired members of the RCMP who took maternity leave in the 1990s. After their leaves, they experienced difficulties meeting work obligations and childcare responsibilities. The RCMP did not permit regular members to work part‑time but had a job‑sharing program so they could split one full‑time position. The three claimants enrolled in the job‑sharing program; they and most of the other RCMP members who job‑shared were women with children.

Pursuant to the legislation, RCMP members could treat certain gaps in full‑time service, such as leave without pay, as fully pensionable. The claimants were not able to purchase full‑time pension credit for their job‑sharing service. They were treated like part-time employees who only received pension credits pro-rated for the hours worked.

The claimants initiated an application arguing that the pension consequences of job‑sharing have a discriminatory impact on women contrary to section 15(1) of the Charter. Section 15(1) of the Charter provides as follows:

Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

The Federal Court found that job‑sharing is part‑time work and the claimants could not obtain full‑time pension credit for it, and this did not violate section 15(1) of the Charter. The application judge compared job‑sharing to leave without pay. The Federal Court of Appeal dismissed the claimants’ appeal. The claimants appealed to the Supreme Court of Canada.

The Section 15 test

To prove a “prima facie” violation of section 15(1), a claimant must demonstrate that:

1-the impugned law, on its face or in its impact, creates a distinction based on enumerated or analogous grounds; and

2- the impugned law poses burdens or denies a benefit in a manner that has the effect of reinforcing, perpetuating, or exacerbating disadvantage. 

The claimants argued that the negative pension consequences of job‑sharing infringed section 15(1) because they have an adverse impact on women. Adverse impact discrimination occurs when a seemingly neutral law has a disproportionate impact on a protected group.

If a claimant can establish a “prima facie” violation of section 15(1), the government must then establish that the violation is justified.

SCC Decision

The Supreme Court of Canada allowed the appeal in a 6-3 decision. The minority (3 of the 9 judges) would not have allowed the appeal. The reasons of the various judges demonstrate a significant disagreement regarding the equality rights protected in the Charter. Those reasons are each summarized here.

The majority (6 judges) said:

At the first step, in order for a law to create a distinction based on prohibited grounds through its effects, it must have a disproportionate impact on members of a protected group. Two types of evidence will be especially helpful in proving that a law has a disproportionate impact on members of a protected group. The first is evidence about the situation of the claimant group. The second is evidence about the outcomes that the impugned law or policy has produced in practice. Both kinds of evidence are not always required.

The majority also said:

  • it is not necessary to prove discriminatory intent;
  • legislation with an ameliorative purpose can still be challenged pursuant to section 15(1);
  • it is not necessary to prove that the protected characteristic “caused” the disproportionate impact; and
  • it is not necessary to prove that the law affects all members of a protected group in the same way.

The second step of the section 15 test is whether the law has the effect of reinforcing, perpetuating, or exacerbating disadvantage. There is no rigid list of factors for the court to consider. The goal is to examine the impact of the harm caused to the affected group, which must be viewed in light of any systemic or historical disadvantages faced by the claimant group.

Full‑time RCMP members who work regular hours, who are suspended, or who go on unpaid leave can obtain full pension credit for those periods of service under the pension plan. However, full‑time members who temporarily reduce their hours under a job‑sharing agreement are classified as part‑time workers and cannot acquire full‑time pension credit for their service.

Family/caregiver status is not yet a protected ground in the Charter and the majority held that whether family/caregiver status should be protected under the Charter did not need to be decided in this case.

The use of a temporary reduction in working hours as a basis to impose less favourable pension consequences plainly has a disproportionate impact on women. The relevant evidence showed that RCMP members who worked reduced hours in the job‑sharing program were predominantly women with young children. These statistics were supported by compelling evidence about the disadvantages women face as a group in balancing professional and domestic work.

The Federal Court incorrectly relied on the claimants’ “choice” to job-share because differential treatment can still be discriminatory even if it is based on choices made by the individuals.

For the second part of the test, the majority said this adverse impact perpetuates a long‑standing source of disadvantage to women: pension plans have historically been designed for full‑time employees with a male pattern of employment.

The majority found that the government could not prove this limit on the right to equality was justified. The government identified no pressing and substantial purpose that explains why job‑sharers should not be granted full‑time pension credit for their service.

Two of the three dissenting judges (Brown and Rowe) said:

It is important to examine the pension plan in its entirety. The only employment statuses provided for under the pension plan are full‑time, part‑time, and leave without pay. Job‑sharers are treated as working part‑time during the period in which they job‑share. As they work part‑time hours, they receive part‑time pension benefits for the period they job‑share.

The plan is a “contributory defined benefit pension plan,” which means that contribution rates are based on a percentage of a member’s earnings. All members accrue pensionable service at the same rate regardless of whether they work part‑time or full‑time (e.g. one‑year of part‑time work and one year of full‑time work both count as one year of pensionable service).

Members who are on leave without pay (LWOP) do not contribute to the pension plan during their leave because they are not working. They can “buy back” pensionable service following a period of LWOP. By contrast, members who job-share do make pension contributions during the job-share period, based on their part-time hours. The claimants are seeking to obtain a full-time pension benefit in respect of a period where they have worked part‑time hours. No other members are entitled to such a benefit. Even members who take LWOP are limited to the hours they worked prior to taking LWOP (e.g. the part‑time member who takes LWOP is only able to buy back part‑time pension benefits for their time spent on LWOP). The claimants are, in this sense, asking to be put in a better position than everyone else under the plan.

Step one of the section 15(1) test requires a distinction. The two ways in which a distinction can be framed on the basis of sex are by comparison to full‑time members and by comparison to members who take LWOP. The comparison to members who take LWOP is a distinction that is not based on sex because there is no evidence that members taking LWOP are less likely to be women. However, the distinction by comparison to full‑time members is a distinction based on sex because members of the job‑sharing program are disproportionately women, whereas uninterrupted full‑time employment is a male pattern of employment. Therefore, the pension plan creates a distinction that, in its impact, is based on sex.

Step one of the section 15 test requires a claimant to establish causation between the impugned law and the disadvantage. Correlation is not enough. There may be other independent factors causing the disadvantage. Where a law is created to reduce a pre‑existing systemic disadvantage (without eradicating it), an element of disadvantage will obviously be present. In such cases, a claimant cannot meet step one by pointing to a statistical difference and a broader group disadvantage.

Step two of the section 15 analysis must consider whether the unequal impact corresponds with a group’s actual circumstances or needs or whether it is in any other sense substantively discriminatory. To establish substantive discrimination, an element of arbitrariness or unfairness has always been required in the section 15 analysis. This does not mean the law must have a discriminatory purpose; it does not.

It is not arbitrary or unfair (and therefore not discriminatory) for an employer to prorate compensation, including benefits, according to hours worked when this responds to employees’ actual capacities and circumstances.  Employers must be able to compensate employees based on hours worked and offering pension benefits that are prorated to hours worked is not substantive discrimination.

The pension plan does not represent a source of ongoing systemic disadvantage as it does not contribute to women’s systemic disadvantage; nor does it reinforce, perpetuate, or exacerbate the pre‑existing disadvantage of women in the workplace which arises in part from unequal distribution of parental responsibilities. The provisions of the pension plan represent an example of a government acting incrementally to address inequities that exist in society, using provisions that do not have a discriminatory impact. The legislation is ameliorative in both intent and effect.

The third dissenting judge (Côté) said:

The claim fails at step one of the section 15(1) analysis because the impugned provisions of the pension plan do not create a distinction on the basis of sex. The effect of the provisions is to create a distinction not on the basis of being a woman, but on the basis of caregiving responsibilities alone or as a result of a combination of sex with caregiver status. Caregiving status can be separated from sex. Same‑sex couples with children, as well as those individuals with elderly caregiving responsibilities will all be disproportionately affected.

Disproportionate impact alone is not sufficient to meet step one of the section 15(1) analysis. Step one includes a requirement of causation, nexus or tether between the impugned provisions and their effect.

In the present case, the claim is on behalf of women with children, and not simply women. It is critical that the claimants had caregiving responsibilities that made them decide to job‑share. The statistics show that women are disproportionately affected — given that the majority of job‑sharers are women with children — but this is insufficient to say that step one has been met. There is no reason why job‑sharing is a singularly sex‑based issue: rather, it is a caregiving status issue because job‑sharing is a solution for all members with caregiving responsibilities, not just a solution for those of a certain sex who have children.

The claimants cannot satisfy the first step of the test because the alleged distinctions are based on caregiving status; not sex.  It is up to the legislature to address any policy gaps in the plan’s provisions in these circumstances.

This update was authored by Scott Marcinkow. Looking for more information regarding similar issues? Contact Scott at smarcinkow@harpergrey.com or anyone else listed on the authors page.