Restrictions on Benefits on the Basis of Sexual Orientation Discriminatory

Dwyer v. Toronto (Metro) (No. 3) (1996), 27 C.H.R.R. D/108 (Ont. Bd.Inq.)

William Dwyer and Mary-Woo Sims allege that the Municipality of Metro Toronto discriminates against lesbian and gay employees who have partners of the same-sex with respect to three categories of employment benefits: uninsured benefits (such as leave to care for ill dependents); insured benefits (such as extended health); and survivor pension entitlement. They assert that this discrimination with respect to benefits contravenes the OntarioHuman Rights Code and the Canadian Charter of Rights and Freedoms.

Though Metro Toronto argues that in practice uninsured benefits, such as bereavement leave and leave to care for ill dependents, are granted on a discretionary basis to lesbian and gay employees to mourn for or take care of persons with whom they are intimate, the collective agreement with CUPE, Local 79 and Metro personnel policies do not acknowledge the family relationships of employees in same-sex relationships and no formal written direction has been given to managers that same-sex relationships are covered.

CUMBA is the insurer and administrator of the various medical benefit plans at Metro. The major insured benefits include comprehensive medical benefits (e.g. drugs, glasses, orthopedic shoes, chiropractor, basic and orthodontic dental plan). Group life and long term disability are also provided, though those plans are administered by different insurance carriers. These benefits are commonly considered a part of the total wage package of employees.

Since 1992, Metro has provided insured benefits in respect of same-sex relationships. However, it does so on an "interim" basis because the definition of "spouse" in the Municipal Act does not authorize the provision of extended health benefits to same-sex partners. In 1992 the Metro Council requested the provincial government to amend the definition of "spouse" in the Act to provide the appropriate authority, but this amendment has not been made.

Also Metro employees receive pension benefits through the Ontario Municipal Employees Retirement System (OMERS). OMERS is one of the largest retirement plans in the country. It includes over 1,100 municipalities providing pension benefits to approximately 200,000 employees and 60,000 pensioners. The same-sex partners of Metro employees are not entitled to survivor pensions under the terms of the OMERS plan. Eligible spouses are the opposite-sex partners of employees, either married or common law.

Pensions are commonly recognized as a form of employee compensation, in effect, as deferred wages. There are various types of pension plans, but the federal Income Tax Act ("ITA") sets out the framework for registration of pension plans. Significant tax advantages flow from registration under the ITA. Employee contributions (within the limits prescribed) are tax deductible; the investment earnings of the pension fund are tax sheltered until pay-out; the employer contributions are not a taxable benefit to employees at the time the contributions are made. However, the ITA has an opposite-sex definition of "spouse" in respect of pension plans (though both married and common law spouses are included) and does not permit the payment of survivor benefits to a same-sex partner. A pension plan which provides such benefits is subject to deregistration under the ITA and the loss of significant tax advantages. The Ontario Pensions Benefit Act ("PBA"), which requires that pension plans in Ontario conform with it and be registered with the Pension Commission, also defines "spouse" to include only opposite-sex partners. Since 1988, the PBA has required that pension plans provide benefits for surviving spouses in the form of a lump sum death benefit or a survivor pension.

As a result of these various legislative provisions regarding pensions, currently a same-sex spouse has no status comparable to an opposite-sex spouse and is not entitled to a survivor pension. A same-sex partner may be eligible for a lump sum death benefit if he or she is named as beneficiary in the pension plan. But as the beneficiary not the "spouse", the same-sex partner will have to pay tax immediately on the lump sum death benefit because the tax shelters of the ITA are provided only to recognized "spouses". A recognized spouse is entitled to "roll over" the funds so that the monies are tax sheltered until they are paid out.

Since the consequences of deregistration of a plan if same-sex survivor pensions are provided are drastic, alternative "off-side" arrangements have been designed by some employers to provide survivor benefits to same-sex partners. A Registered Compensation Arrangement ("RCA") is an "off-side" plan funded outside the regular pension plan. It operates like a registered pension plan but without the significant tax advantages to the employee and the employer. Also, the applicable tax rates produce a net effect of halving the investment return. Consequently, there is a significantly higher level of contributions required to produce a comparable level of benefits.

The Board of Inquiry finds that it has the authority to consider the constitutionality of its enabling statute, the OntarioHuman Rights Code. It is also appropriate for it to consider the constitutionality of the other pieces of legislation which are directly linked to this complaint, including the PBA, the Municipal Act and the Municipality of Metropolitan Toronto Act. An administrative tribunal may address a Charter issue if it has jurisdiction over the whole matter before it, namely, the parties, the subject-matter and remedies sought, although the tribunal may only treat an impugned provision as invalid for the purposes of the matter before it and cannot issue a formal declaration of invalidity.

The issue here is whether the practice of denying equality in benefits to the same-sex partners of Metro employees contravenes s. 15 of the Charter which, the Supreme Court of Canada has ruled, prohibits discrimination based on sexual orientation. The Ontario Human Rights Code prohibits discrimination on the basis of sexual orientation but it still contains an opposite-sex definition of "spouse" and "marital status". Section 10 of the Code defines marital status as "the status of being married, single, widowed, divorced or separated and includes the status of living with a person of the opposite-sex in a conjugal relationship outside marriage". The other legislation that is implicated here contains similar definitions. Before the Board of Inquiry are these questions: (1) do opposite-sex definitions of spouse and marital status violate s. 15 of the Charter when they are applied to justify the refusal of employment-related benefits to the same-sex partners of Metro; (2) can this discrimination be justified as a reasonable limit pursuant to s. 1 of the Charter.

Since the respondents concede that the benefit schemes discriminate on the basis of sexual orientation, the Board of Inquiry proceeds directly to consider the question of whether the discrimination is justified as a reasonable limit pursuant to s. 1.

The respondents argue that the restriction of insured benefits and pension benefits to opposite-sex partners reflects: an incremental approach to expanding protection against discrimination; concern with the additional costs and administrative burden; support for couples with capacity to procreate and which generally raise children in society; legislative consistency with other provincial statutes and with the ITA. The Board of Inquiry finds that the evidence is questionable as to the objectives of the legislation beyond a desire to provide benefits to female spouses in traditional family units where the husband worked outside the home and the wife raised the children and was economically dependent. The Board of Inquiry accepts this as a valid legislative objective.

However, the Board of Inquiry finds that the means chosen to achieve the legislative objective is to allow discrimination with impunity against the same-sex spouses of employees. There is no rational connection between a desire to extend employment benefits to wives or women in general and an opposite-sex definition of "spouse". The statutory language is neutral; the benefits apply equally to the husbands of female employees. The provision is not related to financial need or economic dependency; the benefits are extended where both husband and wife are employees and/or are financially secure. At the same time same-sex partners are totally denied benefits even if their relationships reflect economic dependency and financial need -- the very concerns of the legislation. Finally, there is not a proportionality between the effects of the measures (the denial of benefits to same-sex spouses) and the objective of ameliorating female poverty.

The Board of Inquiry considers the decision of the Supreme Court of Canada in Egan v. Canada, which found that, although it was discrimination to deny spousal benefits under the Canada Pension Plan to same-sex partners, this discrimination was a reasonable limit that was justifiable pursuant to s. 1. However, it distinguishes the decision from the matter before it because the Supreme Court of Canada was dealing with social benefits not employment benefits. The Board of Inquiry finds that a stricter application of s. 1 criteria is necessary where an individual"s earnings are involved and the discrimination results in the unequal treatment of employees solely because of the sex of their spouses.

The Board of Inquiry concludes that the equality guarantees in s. 15 of the Charter are contravened by the opposite-sex definitions of spouse and marital status in the Code and related legislation regarding the employment benefits in question in these complaints. The opposite-sex definitions in the legislation constitute discrimination based on sexual orientation. The offending provisions are not saved by s. 1 as limitations demonstrably justified in a free and democratic society.

Considering remedies, the Board of Inquiry concludes that with respect to pension benefits the stumbling block to equality for same-sex spouses is the opposite-sex definition in the ITA. That is beyond the jurisdiction of the Board of Inquiry to address since the ITA is federal legislation. The Board of Inquiry is not convinced that requiring the establishment of an "off-side" arrangement for pension benefits is appropriate in all the circumstances. However, once the ITA permits the benefits to be extended without deregistration of the pension plans, the benefits should be provided to same-sex partners.

The Board of Inquiry orders that:

  1. The definitions of "spouse" and "marital status" in s. 10 of the Code are to be read down so as to eliminate the discriminatory effect of the words "of the opposite-sex".
  2. The opposite-sex definitions of "spouse" in the Municipal Act and theMunicipality of Metropolitan Toronto Act are to be read down in connection with the authority of municipalities to enter into contracts to provide insured benefits (including health plans) for their employees, their spouses, and children.
  3. The Province is to interpret and apply the Municipal Act definition of spouse as if it included same-sex spouses with respect to insured benefits and uninsured benefits, and to apply this to pension benefits as well once the definition of spouse is changed in the ITA. The Province is ordered to advise all municipalities of this interpretation within a reasonable time.
  4. Metro is to continue providing insured benefits to same-sex spouses on the same basis as such benefits are provided to opposite-sex spouses.
  5. The opposite-sex definitions in the PBA (and related provisions in the OMERS Act and the provincial ITA) are to be read down so that same-sex spouses are not excluded once the federal ITA permits pension benefits to be extended without deregistration of the pension plans.
  6. Metro is to provide uninsured benefits without discrimination on the basis of the sex of the spouses of its employees, and to take the necessary steps to inform its managers and employees of their entitlement to such benefits. Metro and CUPE, Local 79 are directed to enter into a Letter of Understanding which clarifies the entitlement of same-sex spouses to uninsured benefits under the collective agreement.

Metro is ordered to pay Mr. Dwyer the sum of $10,000 as general damages and $1,200 for expenses which he incurred because of the discrimination. Metro is also ordered to pay Ms. Sims $4,000 as general damages.

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