Terminating an Employee on Long Term Disability? Think Twice.

By Kathryn Benson, MIRHR

Senior Human Resources Consultant, HR Options

As HR consultants, we often get asked how long an employee must be on leave before they can be terminated? It's a loaded question and never has a simple answer.

Terminating an employee on a Long Term Disability leave requires careful consideration of the following factors:

• Federal and Provincial Human Rights Commissions prohibit the discrimination of an employee based on disability (i.e. illness), so the employee's job must be kept open to them upon their return from leave.

• Doctors/Specialists can be unclear in their written communications to you regarding when the employee will return to work (without a definite "this employee will never work again" - the employee's job should remain open to them per the first bullet point).

• If the employee is on your Group Benefit Plan for health and dental coverage, by terminating the employee you're also terminating their access to these group benefits (which if the employee is disabled, they probably rely on).

Here are the list of vital questions that you must consider before termination:

• What does the employee's Employment Agreement say with regards to termination? Are there any special clauses you have to consider? 

• What does the employee's Employment Agreement say with regards to when Supplemental Group Benefits (i.e. health and dental) will terminate? If the Agreement doesn't speak to this, it is more difficult to terminate the employee from your Group Benefit Plan. If you've done your due diligence in advance, the Agreement will state that Group Benefits terminate after X months or years if the employee is on Long Term Disability. If your Agreement does not address Group Benefits terminating, is there a government health and dental program that assists disabled employees (and/or employees in a lower income bracket) so if termination is necessary, you can transition the employee from your plan to the provincial plan as part of your termination package? Should you include a lump sum payment as part of the termination package to assist the employee with securing new health and dental coverage?

• What does the Doctor/Specialist documents say about return to work? If they indicate a definitive "never able to return to work" then you can confirm with the LTD insurance carrier that LTD benefits will continue (the insurance carrier will be collecting this information as well) and proceed with termination. If it's not a definitive answer, termination is more difficult (i.e. higher cost, higher risk).

• How long has the employee been employed? If they can work again, how easy would it be for them to find a new job? Ask yourself all the questions you would in a normal termination and then determine the appropriate notice of termination - remember to consider common law (i.e. legal precedent)!

It's always wise to speak with an employment lawyer when terminating an employee on Long Term Disability leave to ensure you are minimizing liability and providing as fair a termination package as possible for the employee.

About HR Options: 

HR Options is Total Human Resources Services provider, meaning we provide HR Consulting and Outsourced Employment services. Outsourced employment means that we take the burden of Canadian employment, payroll, Group benefits, Group RRSP, and human resources management of employees off your hands, so you can focus on your business.  The employee performs work for you and HR Options handles all aspects of employment from beginning to end. Please call us at 1-866-859-4157 toll free, or see our service options at www.hroptions.ca.