The Canadian Bar Insurance Association
Employment & Labour

Fired while ill?

By Bram Lecker and Simon Pelsmakher

For most of us, a secure job is one of the most important pillars in our life. It is a mainstay to financial security. Our employment laws are written with a general understanding that employers proceed with utmost caution when they fire an employee. While your employer can fire you for whatever reason they deem fit, the reason cannot be discriminatory. Disability is one such area of discrimination. Experienced employment lawyers have seen too many cases that go beyond the limits of decency, particularly in the case of individuals who are fired while ill and receiving short-term disability (STD) or long-term disability (LTD) benefits.

Duty to mitigate

Following a job loss, the law requires you to do everything necessary to find alternative employment. Known as the employee’s duty to mitigate, it reduces potential damages your employer could face in a wrongful dismissal case.

Fired while ill? Double dipping

Furthermore, if you are receiving disability benefits prior to your termination date, the law recognizes that the termination pay and disability benefits may offset one another to prevent “double dipping.” In those circumstances, your employer may attempt to reduce their termination liability by using arguments of double dipping and mitigation. Fortunately, exceptions exist to these rules, as illustrated in the following two cases:

In this case, the employer terminated a 38-year-old office manager after 16 years of service. They offered her 17.9 months working termination notice. Two months later, she suffered depression. It prevented her from working for the remainder of her notice period and she went on leave with disability benefits.

Shortly thereafter, she sued her employer for wrongful dismissal. They wanted to offset the termination pay with her disability benefits. However, the court ruled that the employee had not signed a contract which expressly prevented her from collecting disability benefits simultaneously with termination pay. Consequently, her employer remained on the hook for termination pay. Other courts have ruled similarly, but for different reasons. If you pay for employer-sponsored disability plans through payroll deductions, you are purchasing a benefit for wage protection. Disability benefits, in this case, are completely unrelated to termination pay.

The employer also argued that, because the employee did not continue her existing employment through the working notice period, they deserved a discount on the termination pay. The court recognized that the employee’s position was still intact. She could have mitigated the damages had she been healthy. But her disability completely prevented her from working, even on a temporary basis. The judge shut down her employer’s line of attack here too and awarded her 19.4 months of loss of income notice without deducting amounts for the LTD benefits she had received.

In a similar case, a 59-year-old had worked for an employer for more than three decades. In December 2007, she was unfortunately stricken with lung cancer. The treatment caused her to miss work from time-to-time. Eventually, her illness became so severe that she commenced disability leave.

Shockingly, rather than accommodating this employee’s debilitating illness, the employee was fired while ill in April 2009. When she sued for wrongful dismissal, they used similar arguments as in the case described above. And the court ruled in favour of the employee, noting that she had not signed any contract preventing her from collecting disability benefits along with termination pay. Furthermore, the court stipulated that the disability benefits were being paid by the insurer. They were unrelated to the employer’s obligations and the employee’s right to receive termination pay.

The mitigation argument

From there, the employer tried to argue mitigation. While they recognized that the employee’s illness prevented her from working, they maintained that if her health improved, they required her to mitigate the damages by seeking alternative employment. To succeed on this point, the court put the burden of proof squarely on the employer.

“[The employer] bears the onus of demonstrating that [the employee] failed to make reasonable efforts to find work, and that she could have found an alternative position had she taken reasonable steps.”

The employer was unable to furnish concrete proof of mitigation failure. Consequently, the court found the employee wrongfully dismissed. In addition to awarding her 22 months of termination pay, they slapped a fine for damages in excess of $50,000 against the employer.

Protection for employees who are fired while ill

Illness and disability may cause you to take time off from work. During this time, you will be particularly vulnerable. Canadian laws recognize this and require your employer to accommodate your illness or disability when you return to work. Sadly, some employers act shortsightedly in such circumstances. Pegging you as “damaged goods,” they may try to frustrate you into an unwilling resignation. Others may block you from accessing your disability benefits. And the worst offenders will outright fire you while you are ill.

All of this can result in serious legal and economic consequences for them. As the above-referenced cases illustrate, your employer cannot simply slough their termination responsibilities off to their insurer. Arguments of double-dipping or failure to mitigate are extremely difficult. In fact, they can actually result in bad faith or punitive damages.

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