The document outlines the legal framework surrounding employment termination, highlighting the obligations under the Employment Standards Act and common law regarding notice and severance based on length of employment and circumstances of termination. It emphasizes that termination due to disability is discriminatory unless the employee cannot perform essential duties and accommodations impose undue hardship on the employer. Additionally, it discusses the implications of contract frustration in cases of employee illness and errors in administering group disability insurance claims.

1. Employment Law and Disability Insurance
Ava Kanner
David Cherepacha
Davies Howe Partners LLP

2. Employment Law: Terminating an Employee

3. Termination of Employment
•
Sources:

Contract

Employment Standards Act (“ESA”)

Common law

4. Termination of Employment
Employment Standards Act
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Must give notice of termination or pay in lieu thereof
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Notice period: 1 week for every year, up to 8 weeks
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No notice if an exception applies (e.g. wilful misconduct, refusing reasonable alternative work, reaching retirement age)

5. Termination of Employment
Employment Standards Act
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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

6. Termination of Employment
Common Law
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Notice or pay in lieu due at common law, unless contract says otherwise
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Length of notice factors include:
Length of employment
Nature of position
Age
Prospect of finding alternative work

7. Termination of Employment
Common Law
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If there is just cause for termination, no common law notice required
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“Just cause” not necessarily same as “wilful misconduct, disobedience or wilful neglect of duty” under ESA

8. 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”

9. Employees with Injury or Illness
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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

10. •
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

11. •
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
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Frustration: contractual obligation becomes incapable of being performed, making contract fundamentally different from what was originally contemplated
Frustration of Contract

12. Impact of frustration on Notice
•ESA: employer not exempt from notice requirement
•No common law notice
Frustration of Contract

13. Frustration of Contract
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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:
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employee was totally disabled
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no reasonable, foreseeable date for his return

14. Frustration of Contract
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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:
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no known return date
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lack of evidence of no reasonable likelihood of return to work in reasonably foreseeable future
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no evidence of hardship or disruption to business by holding position

15. Frustration of Contract
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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

16. Frustration of Contract
•
Altman v. Steve's Music Store Inc., 2011 ONSC 1480

Factors for whether contract is frustrated:
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terms of the contract
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length of past employment
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how long employment was likely to last in the absence of illness
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nature of the employment
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length of illness or injury
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prospect of recovery

17. Errors in Administering Group Disability Policies

18. Disability Insurance
Case 1
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Employee worked as dispatcher for coach line
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Employee requested enrolment in group LTD plan
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Employer allegedly failed to enroll employee or deduct benefits
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Employee became ill and made LTD claim, which was denied

19. Disability Insurance
Case 2
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Employee worked as security officer
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Employee left work due to illness
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Through an oversight, employer had never enrolled employee in group LTD plan
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Employer attempted to enroll employee after claim for LTD benefits
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LTD benefits denied

20. Disability Insurance
Case 3
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Employee worked as welder and participated in a work sharing program
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Employee became ill
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LTD claim denied on basis that policy required employee work at least 25 hours per week

21. Disability Insurance
Case 4
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Employee worked as office services clerk
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Employee stopped working due to work- related stress
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Employer allegedly told employee she had no LTD coverage
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As a result, employee filed LTD claim 8 months late and claim was denied

22. 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