Can You Terminate an Employee on Long Term Disability?

Technically, yes. However, if an employer does not follow very specific procedures and timelines, they could face legal liability for firing the employee.

This is true because the law in Ontario gives employees on long term disability certain rights based on their status that other employees may not have. Unfortunately, there are no bright-line rules about when it is appropriate to terminate an employee. Every situation is different, and it will vary based on the facts of the case.

The Basics of Long Term Disability

Any employee who is on long term disability has shown that he or she is considered “totally disabled” under the definition in the insurance policy. This definition varies by insurance company, but it will mean that the worker is not physically or mentally capable of working, at least for some period of time.

In general, someone is considered totally disabled if they cannot return to the same job within two years of the date of the disabled. Then, most insurance policies will switch the definition of totally disabled to not just the job that they were doing, but any employment at all. That means that the worker is unable to return to any type of work based on his current experience, training, or education level at the time of the injury or illness.

Under these circumstances, most long term disability insurance carriers will require that the worker also applies for Canada Pension Plan (CPP) disability benefits as well.

The Balance Between Worker Needs and Employee Needs

When an employee goes on long term disability, both the employee and the employer understand that the worker will not be able to come back to work for some time. The employee may want their job held so that they can return if there is any hope of coming back to work.

The employer, on the other hand, may need to fill that position to continue to operate. If long term disability benefits are coming from the employer, there is also an interest in stopping those payments as soon as possible as well.

To ensure that there is a balance between these two concerns, Canada law has developed in a way that attempts to make these competing interests as fair as possible.

Terminating an Employee on Long Term Disability in Ontario

In general, the rule for terminating an employee on long term disability in Ontario is that the employee must be “unlikely” to be able to return to work at all for an employer to terminate a worker’s employment in Ontario. The rationale for this rule is that the employment contract between the worker and the employee is “frustrated” because of the employee’s inability to work.

There is no “for cause” termination possible if the employee is on long term disability.

While this rule may seem straightforward, it actually requires extensive factual investigation and expert opinion. Getting an opinion from a doctor to determine whether a worker can return to work at any point is vital.

If an employer does not have the medical evidence that they need, then they could be required to continue making benefit payments, even after the employee is terminated. They may also end up having to pay legal costs for the employee as well.

Do you need help with a long term disability claim that involves employment termination? Diamond & Diamond is a great resource. Learn more by contacting our team today.