Wednesday, 24 June 2015

Termination from Employment While on Disability Leave

There is never a good time to be fired from one’s job. However, some times are worse than others. A particularly bad time to be fired is while absent from work on disability leave.

While there are few definitive answers when it comes to the law, this post will take a look at some of the most common questions concerning termination from employment during disability leave.

Can You be Fired While on Disability Leave?

The first common question with respect to termination from employment and disability leave is whether an employer can legally fire someone while they are on disability leave.

The short answer is probably.

The long answer is more complicated. Generally, being absent from employment on disability leave does not protect one from being fired if the reason for termination is wholly unrelated to the disability. For example, when a store or factory goes out of business, everyone, including those on disability will lose their jobs. However, if the fact that the employee was absent from employment on account of a disability was a factor in the decision to terminate employment, then the termination may be illegal and employee can apply to get his or her job back.

Whether the termination is “illegal” or not turns on the facts of the case including:

  • Whether the employee’s disability was a factor in the decision to terminate employment;
  • Why the employee is on disability leave (disabilities arising from workplace accidents are treated differently);
  • Whether the employee works in a federally or provincially regulated industry;
  • How long the employee has been absent; and
  • How easy it is to replace the employee

For more information on those issues consider these posts:

Will My Disability Benefits End Now that I’ve been Fired?

A common concern among those who are fired while on disability leave is that their disability benefits will end with their employment.

The usual answer to the question “will my disability benefits end now that I’ve been fired” is no.

Typically, disability benefits are provided pursuant to a contract of insurance issued by a third-party insurance company (e.g. Manulife, Great West, Sun Life.) That contract of insurance is typically completely and wholly separate from your contract of employment and just because one contract has been ended does not mean that the other one must be ended as well.

So, while every case is different and any individual contract would have to be reviewed, typically if an employee in receipt of disability benefits has his or her employment ended, the disability benefits will continue for so long as the employee remains contractually entitled to the receipt of those benefits.

Health and dental benefits, prescription drug benefits, and coverage for physiotherapy and chiropractic care on the other hand may end with employment. Typically, those benefits are paid for by the employer, meaning that once employment is done, the benefits end with them. In some cases, however, such benefits continue so long as the disability benefits continue – it depends on the plan. In those cases it is important for dismissed employees to do two things:

  1. Ensure that you have received sufficient reasonable notice of termination; and
  2. Ensure that all of your benefits continue for the whole of the reasonable notice period, not just the statutory minimum.

The second point is of critical importance. The law on this point is clear: Employees are entitled to the continuation of all benefits of employment for the entirety of the reasonable notice period. For more on this subject see the post The Requirement to Maintain Disability Benefits on Dismissal.

Can I Get Both Severance and Disability Benefits?

The third most common question is whether an employee terminated from employment can receive both a severance payment and income replacement benefits from the employee’s long-term disability insurer.

While the legal answer to the question ‘can I double dip and get both severance and LTD benefits’ is “it depends”, the usual answer is typically yes.

Whether an employee is entitled to both LTD and severance was canvassed by the Court of Appeal for Ontario in the case of Sills v. Children's Aid Society of the City of Belleville (2000), 53 O.R. (3d) 577, 2001 CanLII 8524 (ON CA). In that case the employer argued that it was entitled to a deduction against its severance obligations for any money received by the employee for long-term disability insurance.

In resolving that the employer could not deduct the LTD benefits from its severance obligations the Honourable Justice Janet Simmons, on behalf of the Court of Appeal for Ontario wrote the following:

[45] Absent an express provision precluding double recovery… I consider it reasonable to assume that an employee would not willingly negotiate and pay for a benefit that would allow her employer to avoid responsibility for a wrongful act. I consider it reasonable to infer that parties would agree that an employee should retain disability benefits in addition to damages for wrongful dismissal where the employee has effectively paid for the benefits in question.

Put bluntly, as long as the employee ‘paid’ for his or her disability benefits, either directly by paying the premiums associated with such benefits, or a portion thereof, or gave up some portion of his or her salary in consideration of the provision of such benefits (as happened in Sills), then the employee is entitled to both severance and LTD.

Takeaways for Employees with Labour Pains

The takeaway for employees with labour pains is that there are no clear and consistent answers in termination cases. Every case turns on its facts and it is important to have the facts of your case reviewed by a professional before making any final decision. No website will be able to definitively tell you about your rights.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

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