This is your termination while on long-term disability Canada guide. I wrote this from the perspective of an employee on long-term disability leave. After reading this article, you will know your rights to employment while on long-term disability, when an employer can fire you, and how the doctrine of frustration of contract applies to you.
This article is part of our Ultimate Guides to what is long term disability and Wrongful Dismissal Canada.
Termination while on long-term disability Canada: employee rights
With some limited exceptions, employers and employees have the right to terminate an employment contract at any time. Your employer can dismiss you from employment for almost any reason. You have the right to resign from your employment at any time and for any reason.
However, your employment rights will depend on the situation. There are four types of employment dismissal scenarios:
- Dismissal without cause
- Dismissal for cause
- Dismissal for the frustration of contract
- Constructive dismissal
Dismissal without cause
You don’t have an inherent right to keep your job; no one does. Your employer can dismiss you from your job even if you have done nothing wrong and are a stellar employee. We call this kind of dismissal without cause. As long as your dismissal is not based on discrimination, your employer can dismiss you for any reason or none at all. Human rights laws prevent employers from dismissing employees based on protected grounds of discrimination, which include disability. Therefore, in the short term, your employer cannot dismiss you because of your disability. However, your employer has the right to dismiss you for other valid reasons.
If your employer dismisses you without cause, they must give you reasonable notice of termination. Reasonable notice refers to the number of days or months in advance you must be given before your job ends. The length of the reasonable notice period is determined by applying several factors. These factors can include age, length of employment, and the prospects of finding another job.
After the reasonable period is determined, your employer has the option to provide you with working notice. Or they can end your employment immediately and pay severance equal to the pay you would have received over the notice period. To learn more about how this works, check out severance package and long-term disability.
Dismissal for cause
You do not always have the right to receive working notice or severance pay. Your employer could fire you immediately for cause if you engaged in certain types of misconduct. And you would have no right to working notice or severance pay. Your misconduct must be serious. It can include things like chronic absenteeism, incompetence, insubordination, sexual misconduct, harassment of co-workers, misrepresentation at hiring, negligence in performing your work, and off-duty conduct.
If you suffer from sickness or disability, you will likely experience chronic absenteeism and be unable to perform some or all of your work duties. While these issues normally cause your employer to terminate your employment, they cannot legally do so if sickness or disability are the reasons for your poor work performance. Under provincial and federal human rights laws, employees who become sick or disabled are protected from summary dismissal. Under human rights laws, your employer has a duty to accommodate your disability to the point that it causes undue hardship to the employer. Common accommodation is allowing the employee to take extended sick leave without fear of losing his or her job.
Dismissal for frustration of contract
While human rights laws protect your employment in the short term, your employer does not have to employ you indefinitely if you have been off work for a long time and there is no plan for return to your job in the immediate future. Courts have drawn a line between temporary illness and permanent disability when determining if employment has been frustrated. They will consider several factors, including the terms of the employment contract, how long employment would have lasted even if you weren’t sick, the nature of the employment, the period of employment, and how long your disability is expected to last.
Courts will consider all these factors to determine when and if an employment contract has become frustrated. People often cite two to four years as the period when employment becomes frustrated, but courts have rejected any arbitrary times like this. The period could be shorter or longer depending on the specific circumstances.
See Frustration of Contract Ontario to learn more.
Potential Exceptions
Some judges have ruled that frustration of contract can’t happen in situations when a person is on an approved long-term disability claim. The thinking is that if the employment contract contemplated long-term disability, then it can’t be frustrated by the person receiving long-term disability benefits. This principle is an evolving area of the law and may not apply to you, even if you are on an approved disability claim. You would need to seek legal advice on whether the frustration of the contract would apply to you.
If your employment contract has become frustrated, your employment is deemed to end immediately. And you have no right to working notice or severance pay in place of working notice. However, there are some exceptions under provincial and federal employment standards legislation. You may still be entitled to limited severance pay through provincial and federal legislation, even if your employment has become frustrated.
Finally, if your employment contract has not been frustrated, then you have a right to the same reasonable notice as any other employee, even though you are on sick leave. This means your employer must give you working notice or pay severance in place of working notice. Your employer has a duty to prove that your employment has become frustrated. This is often no easy task. So, many employers will opt to pay severance as a way to end their employment.
Innocent absenteeism
Innocent absenteeism, which is similar to frustration of contract, is a concept often observed within unionized environments and collective agreements. Innocent absenteeism refers to situations where employees are unable to regularly attend work due to circumstances beyond their control. These circumstances could include illness, disability, or other factors not attributable to any fault or misconduct on the part of the employee. Employers have the right to terminate employees for such non-culpable absenteeism if the employee is incapable of foreseeable regular attendance.
Its application, particularly regarding frustration of contract principles, remains a topic of debate, as different arbitrators interpret and apply these principles in varying ways.
In cases such as Maple Leaf Meats v. U.F.C.W., Locals 175 & 636 and Toronto East General and Orthopaedic Hospital, some arbitrators have aligned with common law frustration concepts. Conversely, in Oxford Automotive Inc. v. U.A.W., Local 251, it was argued that such principles cannot be extrapolated to employment relationships governed by collective agreements, as there exists no individual contract of employment susceptible to frustration.
A pivotal case, St. Joseph’s General Hospital v. O.N.A., sought to reconcile these divergent views. The arbitration board in this instance acknowledged the reflection of common law frustration of contract within arbitral principles pertaining to discharge for non-culpable absenteeism.
In justifying the dismissal of an employee due to non-culpable absenteeism, an employer must substantiate two key points:
- Excessive Absenteeism: The absenteeism of the employee must be deemed excessive when compared to a relevant group of employees.
- Lack of Prospects for Regular Attendance: There should be no foreseeable prospect of the employee achieving proper and regular attendance in the near future.
A significant precedent in this realm is the NSGEU and Civil Service Comm’n 1987 – Outhouse decision. It establishes that innocent absenteeism cannot serve as grounds for termination if the affected employee is on long-term disability benefits at the time of termination. This ruling emphasizes that when long-term disability has been explicitly addressed in the collective agreement, the doctrine of innocent absenteeism loses its applicability.
Furthermore, if the collective agreement encompasses innocent absenteeism for disability by incorporating long-term disability benefits, the doctrine cannot be invoked as long as the employee remains entitled to these negotiated benefits.
Arbitration decisions on this matter vary widely. Among these, the Maple Leaf decision is frequently cited, asserting that innocent absenteeism can justify the termination of an employee on long-term disability, provided it doesn’t impede the employee’s entitlement to apply for benefits or pursue benefits through appeals or litigation.
A notable case from Newfoundland underscores the trigger for termination rights when an employee settles their long-term disability claim for a lump sum. This settlement can activate the employer’s right to terminate employment, further illustrating the complex interplay between innocent absenteeism, long-term disability, and termination rights within the framework of collective agreements.
In navigating the intricacies of innocent absenteeism, particularly in conjunction with long-term disability, it becomes evident that the interpretation and application of these principles continue to evolve.
Constructive dismissal
Constructive dismissal happens when you technically remain employed, but the employer has changed your employment in such a fundamental way it amounts to a dismissal. In these situations, an employee can treat the contract as having ended. The employee will be owed reasonable notice of termination, either as working notice or pay in place of working notice.
Enforcing Your Rights as an Employee on Sick Leave
If your employer has not met its obligations, there are several ways for you to enforce your rights. These include employment standards boards, human rights commissions, arbitration, and courts.
Employment standards boards
If your employer has violated its obligations under provincial or federal employment standards legislation, you have the right to file a complaint with the provincial or federal employment standards board. They will review your complaint and attempt to negotiate a settlement between you and your employer. The process before employment standards boards can include mediation and, eventually, a hearing before the board. If you can’t reach an agreement with your employer, the board will issue a ruling on your situation that applies to both you and your employer.
The commission will assign an officer to review your complaint. The officer may arrange a mediation between you and your employer. If the mediation fails, then your case will go to the human rights tribunal. This specialized court hears human rights cases and issues decisions binding on employees and employers.
Human rights commissions and tribunals
If you believe your employer discriminated against you based on your disability, then you can file a complaint with the applicable human rights commission. People who work for provincially regulated workplaces should contact the human rights commission in their province. However, employees who work for federally regulated employers should file through the Canadian Human Rights Commission.
Civil litigation
People could sue their employer for severance pay and other damages if they were wrongfully dismissed without reasonable notice of termination. You can start this process by filing a lawsuit with the courts in your province. You would then negotiate with your employer during the court process and possibly reach an out-of-court settlement. If there is no settlement, your case will go before a judge who will make a decision on whether you are owed payment from the employer and, if so, how much. However, not everyone has the right to sue their employer. For instance, workers who are under a collective agreement or arbitration requirement can’t sue their employers.
Arbitration
Some employment contracts include arbitration clauses. These clauses require the employee and employer to settle all disputes between one another through arbitration — rather than the courts. If your contract includes an arbitration clause, then you would make your claims for wrongful dismissal through an arbitration process. The arbitrator is usually an independent lawyer who does not represent either side. He or she would try to facilitate a settlement, eventually act as a judge, and make a final decision that is binding on you and your employer.
Collective agreements/unions
If a collective agreement governs your job, then you likely do not have the right to file a lawsuit against your employer. If you feel you were improperly dismissed from employment, you would have to follow the grievance process set out in your collective agreement. You should speak with your union for advice on how to start the grievance process.
Suing your employer can be a lengthy and arduous process. Seeking assistance from an experienced employment and disability lawyer can be invaluable.
Schedule a free consultation today to explore how Resolute Legal can support you in your legal battle.
Am I still employed while on long-term disability in Canada?
You are still an employee while on long-term disability or any other disability benefit. The only way you would no longer be an employee is if your employer terminated you, you resigned, or your contract ended. Many LTD claimants will eventually be terminated due to “frustration of contract,” however.
People are always very concerned whenever they hear that their employer can terminate them while on LTD. However, your LTD claim will not be affected by your employment status. Your LTD claim is completely separate from your employment, so you don’t have to worry about losing your benefits if you lose your job. However, there could be some implications if you are changing jobs while on long-term disability, as you may not be able to get back on your existing claim if you decide to return to a new job and surpass the “recurrent period.”
How long can an employee be on ltd before termination?
In theory, an employee could be on LTD for the rest of their life without ever losing their job. This is rare and highly unlikely, but there are definitely some employers who would allow an employee to stay employed even after years of being on LTD.
Usually, however, an employee will be terminated at some point after they pass the change of definition. As this illustrates, they will never be able to return to their former position.
Can a company fire you while on long term disability?
Once there is an employment contract, employers have broad authority to terminate any employee for almost any reason. The only limitation is the employer must meet its legal obligations during the termination. These legal obligations come from the common law, employment contract, human rights legislation, and provincial employment standards legislation.
The employer may have an obligation to give notice of termination, pay severance, or make reasonable efforts first to accommodate an employee with a disability.
But can you be fired from your job because of your disability? No, employers cannot fire an employee for a discriminatory reason or purpose. Disability is one of the protected grounds of discrimination under Canada’s common law and human rights laws. So, it is difficult (but not impossible) for employers to fire an employee on long-term disability because the assumption will be the termination is because of their disability.
Before firing an employee on long-term disability, the employer must first meet its obligations to accommodate the employee’s disability. The duty to accommodate means an employer has an obligation to accommodate the employee — short of undue hardship. The employer’s size and financial resources will affect what the courts may consider as undue hardship.
As the employee, you have an obligation to help the employer meet its duty to accommodate. You must get them sufficient information (medical or otherwise) so they know your restrictions and limitations. They have to know what they need to accommodate.
The following are a few legal ways an employer can fire a claimant while on LTD.
Reasonable notice of termination
The general rule is that employers can fire any employee as long as they give reasonable notice of termination. Provincial employment standards legislation gives minimum notice periods based on the length of employment. In Ontario, for example, an employee who was employed for less than one year is entitled to a minimum of one week’s notice of term action. While an employee who was employed for five years — but less than six years — has the right to a minimum of five weeks’ notice.
Provincial employment standards give the minimum, but employees may be entitled to a longer notice period under the common law, their employment contract or collective agreement. For example, under the common law, someone employed for five years could have the right to five to 10 months of notice, depending on the circumstances.
When giving notice of termination, employers have two options. First, they can give notice and require the employee to keep working during the notice period. In this case, the employee would know their employment is ending and can look for other jobs in the meantime. The second and most common avenue for employers to take is to fire the employee immediately but continue to pay the employee throughout the notice period. Or make an equivalent one-time payment to the employee. People often refer to this lump-sum payment as “severance” or a “severance package.”
When calculating reasonable notice periods, the common law does not always apply. Instead, it can be overridden by employment contracts or collective agreements. These employment documents can say what the notice period will be. Or state there is no notice period at all. If they say there is no notice period, then you are still entitled to the minimum notice under provincial employment standards legislation.
Just cause for dismissal
In certain situations, employers are not required to give notice of termination. This happens when the employer has “just cause” to dismiss the employee. This usually means the employee has engaged in bad behaviour, like theft, insubordination, or assaulting other employees.
However, an employee’s bad behaviour doesn’t always trigger just cause for termination. Sometimes, the employer and employee can’t fulfill their obligations under the contract due to unforeseen events. This is known as the doctrine of frustration. Employers often rely on this to fire employees who are on long-term disability.
This is because when there is just cause for dismissal, the employer doesn’t have to give notice or pay severance.
The doctrine of frustration
The doctrine of frustration relieves the employer and employee of their obligations under an employment contract when an unforeseen change in circumstances makes the further performance of the contract impracticable or radically different from what they had originally intended.
Common examples of frustrating events include death, destruction of the workplace, and illness or disability.
If the doctrine of frustration is found to apply, then the employer is not required to give the employee notice of termination or pay severance. The employer can fire you on the spot and pay nothing. Even the minimum notice under employment standards legislation may not apply.
The key, however, is the frustrating event must be unforeseen. The doctrine of frustration cannot apply if either side voluntarily assumed risk for the event by implied or expressed terms of the contract.
How employers use the doctrine of frustration
Employers can use the doctrine of frustration to fire an employee on long-term disability in some — but not all — situations.
Illness or disability can frustrate an employment contract if the employee is likely to be unable to complete the core duties of his or her employment under the contract. This denies the employer what they bargained for under the contract.
A court is more likely to find frustration for illness and disability when certain factors are present:
- The employee worked for a short period of time before going on disability leave
- The employee has used up all available sick pay
- The employee works in a key post that needs to be replaced on a permanent basis
Courts will also consider the employee’s medical prognosis and the likelihood of returning to work in the future. As well as the chance of you not returning to work after long-term disability.
Exception to the doctrine of frustration
On the other hand, if an employee is getting long-term disability benefits under his or her employment contract, the doctrine of frustration may be inapplicable because the parties would have foreseen the alleged frustrating event and would have allocated risk accordingly.
The law of the doctrine of frustration and long-term disability is not settled.
One view is the doctrine of frustration can only apply if the frustrating event was unforeseen. So, If your employment contract included long-term disability benefits, then the event of disability from work was foreseen. Therefore, the employer cannot fire the employee using the doctrine of frustration.
The other view is that long-term disability benefits extend the period before an employer can successfully claim frustration. Some judges have said that merely including long-term disability as part of the employment contract does not guarantee you will work for life.
Regardless of whether the doctrine of frustration applies, an employer can still terminate an employee on long-term disability. As long as they give notice of termination, pay severance, and meet their obligations under human rights legislation.
Does long-term disability continue after termination?
If you submitted your claim before your termination, then yes, your long-term disability benefits will continue post-termination. Your employment relationship should have no bearing on your LTD claim. You will only run into issues if you haven’t applied for LTD benefits before you get terminated.
Otherwise, getting terminated shouldn’t affect your benefits. However, many people do lose their drug and medical plans once they are terminated, so that is something to keep in mind.
Long-term disability employer responsibility
Employers cannot fire an employee for a discriminatory reason or purpose. Disability is one of the protected grounds of discrimination under Canada’s common law and human rights laws. So, it is difficult (but not impossible) for employers to fire an employee on long-term disability benefits.
This is because the assumption will be the termination is because of their disability. Before firing an employee on long-term disability, the employer must first meet its obligations to accommodate the employee’s disability. The duty to accommodate means an employer has an obligation to accommodate the employee — short of undue hardship. The employer’s size and financial resources will affect what the courts may consider as undue hardship.
As the employee, you have an obligation to help the employer meet its duty to accommodate. You must get them sufficient information (medical or otherwise) so they know your restrictions and limitations. They have to know what they need accommodate.
The Employment Relationship
The relationship between employer and employee is governed by several laws, including the Common Law, Employment Standards Acts, Occupational Health & Safety Acts, Labour Relations Acts, Workers’ Compensation Acts, and Human Rights Acts. These laws have both provincial and federal versions.
The laws that govern your employer will directly affect what laws apply to you. If your employer is regulated by provincial laws, then the employment laws in your province will apply to your situation. If your employer is regulated by federal laws, then federal employment laws will apply to you.
All employment situations include both express and implied obligations. You can find the express obligations in your employment contract. Implied obligations refer to unwritten rules deemed to apply in all situations. These obligations still apply even if they are not written in the employment contract.
Your Employer’s Duties
The employer’s duties and obligations also come from the common law and statutes. Your employer’s obligations from common law include the duty to pay you for work done, the duty to provide work, a duty to provide a safe work environment, a duty to treat you fairly, and a duty to give you reasonable notice of termination.
Your employer’s statutory duties arise from Employment Standards Legislation, Occupational Health and Safety Legislation, and Human Rights Legislation. From the perspective of someone on disability leave, your employer’s important statutory duties include a duty to provide termination pay (with exceptions and limits), a duty to provide a work environment free of discrimination or harassment, a duty to allow you to take a sick leave, and a duty to accommodate your disability.
Your duties as the employee
As an employee, you also owe duties to your employer. These duties include:
- Getting to work on time;
- not participating in improper conduct (harassing other employees, drugs in the workplace, criminal acts);
- performing work competently;
- acting in good faith to the employer; and
- to give reasonable notice of resignation
As a person with a disability or as someone who needs a sick leave, you will be in a situation where you will not be able to attend work on time or perform your work competently. Violation of these duties would normally cause the employer to terminate your employment. However, there are special protections for people suffering from illness or disability. These protections arise from your employer’s duties to allow you to take a sick leave and to accommodate your disability.
What happens when an employee goes on long-term disability?
Typically, when an employee goes on LTD, they get their doctor to write them a sick note informing the employer of how long they will be off work. After that, they only communicate with the employer with updates on when they will be back or if any accommodations are needed.
Again, when an employee goes on long-term disability, they are still technically an employee — unless they are terminated, resign, or the employment contract ends.
Can you fire someone on long term disability? What your employer must do
Yes, an employer can fire someone while on LTD. The first thing your employer must do before firing you while on long-term disability is to gather medical information about your limitations and prognosis. They must determine if there is a reasonable possibility of you returning to work in future.
Second, your employer must do a real assessment of whether accommodation is possible without undue hardship. They need to understand your restrictions and limitations. They must conduct a full assessment of accommodation possibilities before assuming the frustration of the contract. You also have an obligation to cooperate and provide the information necessary for the employer to meet its accommodation obligations.
Third, the employer must consider how the termination will affect you, especially any loss of benefits. Loss of medical benefits or pension plan contributions may invalidate your dismissal or subject your employer to huge expenses.
Having issues with termination while on long-term disability in Canada?
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Here at Resolute Legal, we specialize in disability claims and employment law. If you believe you were terminated due to your disability or were given an inadequate amount of notice or severance, contact us today for a free case evaluation.
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