In this article, I discuss long-term disability and termination of employment. 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 Long-Term Disability in Canada and Employment Rights and Disability Benefits.
What is Termination of Employment
Its important to understand all employment is governed by the law of contract — regardless of whether the employment contract is written or verbal. There will automatically be a contract if there is a mutual agreement to exchange labour for payment.
Termination of employment is when an employer withdraws from an employment agreement with an employee.
An employee taking sick leave or going on long-term disability does not result in termination of employment. Once employed, a person stays employed until they resign, are let go by the employer, or the term of employment ends.
When informing your employer about taking a sick leave or going on long-term disability, make it clear you are NOT resigning. Put in writing to employer that you intend to return to work once you have recovered.
Once there is an employment contract, employers have broad authority to terminate any employee for almost any reason. The only limitations are 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.
What is ‘Reasonable Notice of Termination in Long-term Disability?
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 that 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 — is 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 can 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.
Employer’s Duty to Accommodate Employees with a Disability
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 accommodate.
What is ‘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.
What is 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 to Terminate an Employee on Long-Term Disability
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 of 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 need 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.
What your employer must do before firing you while on long-term disability
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 frustration of contract. You also have an obligation to cooperate and give 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.
Long-term Disability Exception to the Doctrine of Frustration of Employment Contract
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.
Hiring a Lawyer
Are you getting long-term disability benefits, and has your employer fired you due to frustration of contract? If so, we can help. Book a free consultation today by calling (888)-732-0470.
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