Strong consideration needed before firing sick employee

If you are an employer who has had an employee off work as a result of illness for an extended period of time, let’s say a couple of years, you should think very carefully before sending them a letter saying the employment relationship is over.
If it is truly a situation in which the employee cannot return to work in the foreseeable future, after an extended absence, an employer can take the position that the contract is frustrated. It’s sort of like a no fault termination. It’s not the employer’s fault the employee can’t work and it’s not the employee’s fault either. If it is a true frustration of contract, the employer need only pay the minimum termination and severance pay required by the Employment Standards Act.
For instance, if the employee has been there seven years, they would be entitled to seven weeks termination pay. If the employer has a payroll of over $2.5 million, since the employee has been there more than five years, they also get seven weeks’ severance pay, 14 weeks in total.
If that employee was a supervisor, they may have been entitled to reasonable notice at common law in excess of that minimum, let’s say seven months so about an extra four months. If the contract is truly frustrated, the employer need not pay that extra four months.
But the onus is on the employer to prove that there was no prospect of the employee returning to work in the reasonably foreseeable future. That means that the employer has to be persistent in requiring information from the treating physicians with respect to a prognosis for a return to work. It’s very difficult, however, for doctors in some cases to predict when an employee will be able to return to work. This is especially the case when there are mental health issues involved. Unlike a broken leg, there is not necessarily a predictable healing time.
This leaves employers caught in a bit of a Catch 22. The employee may have been absent, two, three or four years, and the employer is continuing to pay for medical benefits coverage.
A general rule of thumb is that you don’t even start considering terminating the relationship until after about two years unless it is clear early on that the employee can never return to work.
Employers who only cover part of the cost of healthcare premiums have every right to insist that the employee continue to send in cheques covering their part.  If the employee stops paying, the employer can stop the benefits coverage. But even covering half the premiums, as years go by, the employer’s costs start to mount.
Lest anyone think I am being tough on sick employees, consider it from another perspective: If you own a business and a 35-year-old that worked for you for 18 months goes off ill, do you think it’s fair that you should have to pay for their benefits for the next 30 years until they are 65?
Some employers have started to deal with this issue by limiting how long they will continue benefits for an absent employee. There is no law anywhere requiring employers to provide medical benefits in the first place.  If an employer wants to have a policy  that benefits coverage ends after two years of absence from work for any reason, it can do so.
For many employers, if there are no ongoing benefits costs, there is no reason for them to ever send out that termination letter. Whether the employer can prove it or not, they often know the employee is very unlikely to ever return. The best approach in this case, if you are not paying for benefits,  is to simply never send the termination letter. Why bother? No termination letter; no liability.
Complications with the Ontario Human Rights Code and the obligation to accommodate a person by holding their job open are also avoided.
The risk of this approach, of course, is that once in a while, much to the employer’s surprise, after five or six years of absence, a doctor’s note shows up indicating that the employee is ready to return to work. At that point, the employer is going to need to accommodate that return to work or prepare itself to pay out a severance package sweet enough to prompt the employee to release them from claims for pay in lieu of notice and any human rights issues.
As published by The Hamilton Spectator, February 20, 2012
Ed Canning
Ed Canning
P: 905.572.5809