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Can you terminate an employee with a long-term disability? Ontario court says “desire to work” is not enough to prevent termination.

Fifteen percent of Ontarians, and nearly four million Canadians had “a disability that limited their daily activities,” according to StatsCan. [1]

Small to mid-sized employers struggle with managing disability leave. What do you do when you have a team member on leave for a disability? How do you plan around the absence? If you’re a smaller company, it’s not a matter of “filling in,” since disability leave can be lengthy.

What happens, when there’s no reasonable expectation of return? Even if the employee wishes to return, what should an employer do with an extended leave that has little likelihood of recovery any time soon?

Most employers accommodate however they can, regardless of hardship. Others expect and rely on a physician’s opinion as to reasonable time to return. If there is no expectation of return for “the foreseeable future?” what can a Human Resources Manager do?

Court ruling: employer able to dismiss if permanent disability

In a recent Ontario Court ruling, Katz et al. v Clarke, the courts made it clear that the desire to return to work is not sufficient to prevent termination if medical opinion indicates no return in the “foreseeable future.” [2] The two critical aspects of the case were:

  • Desire to return is not sufficient to prevent termination.
  • The employer may terminate if medical opinion indicates no likelihood of return in the foreseeable future (although every situation is different; legal and expert HR Management advice is suggested.)

The Employment Standard’s Act, 2000 provides guidelines for termination and severance pay and entitlements in this situation. However, terminating an employee who has a reasonable expectation of return would be a violation of the Ontario Human Rights Code.

In the case of Katz et al. v Clarke — (Katz et al. v. Clarke, 2019 ONSC 2188 (Ont. Div. Ct.) — the employee went on long-term disability benefits in 2008. Seeking medical confirmation, the employer was informed there was “no reasonable expectation the employee would be able to perform his essential duties for the foreseeable future.” [2]

The employer decided to terminate and “paid out his entitlements to pay in lieu of notice and severance pay.” Of course, the employee sued, claiming discrimination under the Ontario Human Rights Code. The employer moved to dismiss the lawsuit, but the court refused.

On appeal, though, the appeals court “confirmed employment may be frustrated where there is information that an employee’s disabling condition is permanent. If the contract is frustrated, the parties are generally released from their obligations, including the duty to provide reasonable notice of termination or pay in lieu except as required by employment standards legislation.” [2]

The court held that the duty to accommodate the disability ended when there was no longer any reasonable expectation of return. As a result, the court dismissed the lawsuit.

Contract law versus Human Rights Code

The court held that the employment contract was “frustrated” — precisely because there was no reasonable expectation of return. On the other hand, the Human Rights Code protects “the employee from discrimination because of his or her disability.” [1]

It’s a complex issue and comes down to the facts of each particular case. This is where legal opinion and assistance is crucial. Before this type of situation arises, it is also essential that you seek the advice of a Human Resource Management specialist.

Management is critical: employers should be cautious

Disability leave is protected under labour laws. In the case of a disability claim in your workplace, it is critical that HR Managers be highly pro-active. This includes offering opportunities for the disabled team-member to return — where possible — even in a new role. No HR Manager should aggressively move to dismiss without offering several opportunities to return — and certainly not without medical evidence that specifies “no return in foreseeable future.” Near future would not be sufficient. Dismissal isn’t an option until the employee is on extended leave.

If it presents no hardship, the HR Manager may decide to leave the position open. It will depend on the situation. In certain situations, such as mission-critical positions that cannot be filled with temporary help, it may be necessary to terminate — again, only if medical opinion supports the premise that there’s no reasonable expectation of return. If it goes to court, as in the case of Katz et al v Clarke, this medical evidence will be necessary. The HR Manager would also have to present records of all communication with the employee on leave.

Compassion may not be a legal requirement, but it’s certainly an ethical one. Dismissal is a final solution, a devastating one for someone who has already suffered.

So — can you terminate or not?

It’s not black or white. You can terminate, for example, for legitimate reasons unrelated to the disability. However, claims of discrimination are likely, in this case. If the terminated employee can prove the termination was related to the fact they were disabled, it will then come down to medical opinion on “when they can return.”

The Ontario Human Rights Code protect Ontarian’s from harassment and discrimination, especially where the discrimination is on the basis of disability. In section 5 of the Human Rights Code, it says that every person “has a right to equal treatment with respect to employment without discrimination because of … disability.” [1]

Benefits while on leave

There are several “benefits” available, depending on the situation, including Workers Compensation benefits, Canada Pension Plan disability benefits and Ontario Disability Support programs. There are also private disability plans in many workplaces.

To insure against any claims in future, it is important to have pro-active Human Resource managers or rely on an outsourced team of experts, who will not only ensure everyone is aware of policy and benefits, but will also make sure all the necessary steps are taken in the event of a disability issue.

DISCLAIMER: Always seek legal advice and expert help on Human Resources issues. This feature does not constitute advice, as every scenario is different.

Do you need help with a Human Resources issue? Contact the experts at Pivotal Solutions:

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[1] Prezler Law: “Can you be fired while on disability in Ontario?”
[2] Canadian Employment Law Today “Does a desire to work prevent an employer from terminating if the employee cannot work?”

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