Employers can offer short-term disability coverage which makes employee’s income more secure if they cannot work due to a short term disability. It is expected that after employee’s return from short-term disability, they will be put back into the same or comparable job their previously held. It is in limited situations where an employer will be justified to terminate an employee’s employment after they return. This article will discuss when an employer may be justified in terminating you if you are disabled and will provide some information on LTD and STD benefits.

Frustration of Contract

If there is a high likelihood that an employee will not or cannot return to work due to their disability after a reasonable period of time, an employer will be justified in termination. This type of termination is not rooted in “just cause” termination, but, the notion of “frustration” of contract.

Sometimes, wrongful dismissal damages may be claimed in circumstances where there is a frustration of contract. If your employer failed to consider all surrounding circumstances including an employee’s prospect of recovery, damages may be claimed. However, it should be noted that under the Ontario Human Rights Code, employers only have an obligation to accommodate workers disabilities to the point of undue hardship.

Roskaft v. RONA Inc., 2018 ONSC 2934, established a standard of analysis to conduct when determining if a frustration of contract has occurred due to disability in the employment context. First the court decided the issue of whether at the time of the plaintiff’s termination, there was no reasonable likelihood that the plaintiff would return to work in a reasonable time. Afterwards it examined the “totality of evidence” which was whether the plaintiff qualified for LTD benefits, the plaintiff’s representations of being “totally disabled” as per insurer policy and the plaintiff’s continued receipt of LTD benefits. Based on the evidence, the court held that the defendant was justified in terminating the plaintiff given that there was “no likelihood” of the plaintiff returning to work in a reasonable period of time. Thus, the plaintiff’s termination was not wrongful ultimately as the evidence the defendant had suggested that the plaintiff was totally disabled and could not return to work.

Long Term Disability Entitlements

To qualify for long-term disability benefits (“LTD”), claimants aka employees bear the onus of proving that they are completely disability as per the policy definition provided by the insurer. Commonly, the majority of disability policies in Canada provide that a claimant will be deemed completely or “totally disabled” during the first two years of their disability if they cannot perform substantial job duties of the job they previously held. This is usually termed the “own occupation” definition.

After the two-year mark, policy definitions are altered to encompass a broader job framework from “own occupation” to “any occupation”. The latter definition means that one must be prevented by their disability from engaging in any occupation under which they may be qualified for whether by training, experience or education. At this point, LTD insurers usually require claimants (as per their policy) to apply for CPP disability benefits. If there are enough CPP contributions, an income benefit paid on a monthly basis is available from the federal government to compensate for disabilities that prevent one from working at any job regularly. If CPP disability is approved, the LTD insurer will receive that payment, as “double dipping” is prohibited.

Short Term Disability Benefits

Waiting period for STD can range from one day to one week. They are determined under the insurance policy. STD benefits are usually paid weekly and the duration of pay can range from 15 to 52 weeks. It is important to carefully read your policy to determine at what point you may qualify for LTD benefits. STD benefits are based on a percentage of an employee’s weekly earnings. This percentage is set out in the insurance policy and benefits can range from 50% to 100% of weekly pay. Some employers allow a “top up” coverage that increases the percentage of weekly pay an employee may get if they go on short-term disability.

It should be noted that establishing frustration of contract during STD is more difficult given the relative foreseeability of short-term disability as opposed to long-term disability. Again, the nature of the job is important. If one if a senior employee with extensive responsibilities, frustration of contract is a higher possibility.

Ultimately, if you were off work on STD or LTD and your termination did not rise to the level of frustration of contract or your employer failed to accommodate you, contact Toronto employment lawyer Stacey Ball at 416-921-7997 extension 227.