Employment Law and Disability Insurance

Ava Kanner David Cherepacha Davies Howe Partners LLP

Employment Law: Terminating an Employee

Termination of Employment

• Sources: Contract Employment Standards Act (“ESA”) Common law

Termination of Employment

Employment Standards Act • Must give notice of termination or pay in

lieu thereof • Notice period: 1 week for every year, up to

8 weeks • No notice if an exception applies (e.g. wilful

misconduct, refusing reasonable alternative work, reaching retirement age)

Termination of Employment

Employment Standards Act • Severance of 1 week for every year of

employment if: Employed 5 or more years, and Employer has 50 or more employees or payroll

of $2.5 million or more To a maximum of 26 weeks

Termination of Employment

Common Law • Notice or pay in lieu due at common law, unless

contract says otherwise • Length of notice factors include: Length of employment Nature of position Age Prospect of finding alternative work

Termination of Employment

Common Law • If there is just cause for termination, no

common law notice required

• “Just cause” not necessarily same as “wilful misconduct, disobedience or wilful neglect of duty” under ESA

Employees with Injury or Illness

Human Rights Code • Discriminatory to terminate employee

because of a disability (even with notice) • “Disability” is broadly defined • Employer must accommodate up to point of

“undue hardship”

Employees with Injury or Illness

• Accommodation: modify terms of employment or duties to assist employee in overcoming limitations

• Factors for undue hardship: Financial costs Size of the employer’s operations Risks to health and safety Morale of other employees Impact of accommodation measures on other

employees’ rights

• Can terminate employee due to disability under Human Rights Code only if: Employee is incapable of performing essential

duties, and Employee’s needs cannot be accommodated

without undue hardship

Employees with Injury or Illness

• Common law: cannot terminate for injury or illness without notice, unless it rises to level of frustrating employment contract

• Employer must hold job until contract frustrated

• Frustration: contractual obligation becomes incapable of being performed, making contract fundamentally different from what was originally contemplated

Frustration of Contract

Impact of frustration on Notice • ESA: employer not exempt from notice

requirement

• No common law notice

Frustration of Contract

Frustration of Contract

• Duong v. Linamar Corp., 2010 ONSC 3159 Employee injured at work and was diagnosed

with fibromyalgia LTD benefits ceased after 30 months Employment terminated Contract frustrated: • employee was totally disabled •no reasonable, foreseeable date for his return

Frustration of Contract

• Naccarato v. Costco Wholesale Canada Ltd., 2010 ONSC 2651 Employee began receiving LTD benefits in 2002 Terminated in 2006 - paid ESA minimums Contract not frustrated: •no known return date • lack of evidence of no reasonable likelihood of return

to work in reasonably foreseeable future •no evidence of hardship or disruption to business by

holding position

Frustration of Contract

• Altman v. Steve's Music Store Inc., 2011 ONSC 1480 Employee of 30 years diagnosed with lung

cancer Terminated following 8 months of reduced

hours and 6 months of medical leave Health deteriorated after termination Contract not frustrated: • assessment of health as of date of dismissal

Frustration of Contract

• Altman v. Steve's Music Store Inc., 2011 ONSC 1480 Factors for whether contract is frustrated: •terms of the contract •length of past employment •how long employment was likely to last in the

absence of illness •nature of the employment •length of illness or injury •prospect of recovery

Errors in Administering Group Disability Policies

Disability Insurance

Case 1 • Employee worked as dispatcher for coach

line • Employee requested enrolment in group

LTD plan • Employer allegedly failed to enroll employee

or deduct benefits • Employee became ill and made LTD claim,

which was denied

Disability Insurance

Case 2 • Employee worked as security officer • Employee left work due to illness • Through an oversight, employer had never

enrolled employee in group LTD plan • Employer attempted to enroll employee after

claim for LTD benefits • LTD benefits denied

Disability Insurance

Case 3 • Employee worked as welder and

participated in a work sharing program • Employee became ill • LTD claim denied on basis that policy

required employee work at least 25 hours per week

Disability Insurance

Case 4 • Employee worked as office services clerk • Employee stopped working due to work-

related stress • Employer allegedly told employee she had

no LTD coverage • As a result, employee filed LTD claim 8

months late and claim was denied

Thank You

David Cherepacha Davies Howe Partners

416.263.4506

davidc@davieshowe.com www.davieshowe.com

Ava Kanner Davies Howe Partners

416.263.4503

ava@davieshowe.com www.davieshowe.com