Good faith by employer can allow it to escape penalty for violating obligation to keep workers employed for 12 months
A recent case heard by the Ontario Workplace Safety and Insurance Appeals Tribunal (WSIAT) has settled the divergent law regarding whether and when a penalty should be levied against employers for failing to comply with their re-employment obligation with respect to injured workers, and confirmed that employers and workers may, in certain circumstances, agree to settle issues related to a workers’ compensation claim without need for a full hearing.
In the March 14, 2016, decision, the WSIAT held that, despite Ontario’s Workplace Safety and Insurance Act, 1997 (WSIA) stating that any agreement between an employee and employer waiving the worker’s entitlement to workers’ compensation benefits is void, the employer and worker in question in this case would be permitted to jointly propose a settlement of outstanding issues to the WSIAT to resolve the matters without a contested hearing.
The worker in question suffered a workplace injury on May 6, 2007. On Feb. 7, 2008, while on modified duties, his employment was terminated for cause due to gross insubordination. The worker claimed the employer had breached its re-employment obligation (and that the worker should receive payments from the Workplace Safety and Insurance Board (WSIB) as a result of such breach) due to the worker’s employment being terminated less than 12 months after the injury, as required of construction employers under the former Workers’ Compensation Act (WCA) and the current WSIA.
Subsection 41(13) of the WSIA allows the WSIB the authority to impose a penalty of one year of the employee’s earnings on the employer if the employer does not fulfill its obligation to re-employ a construction worker following a workplace injury. The instant decision was decided in accordance with a similar provision in the former WCA.
Given the amount of time that had passed since the accident, the employer’s only interest was in ensuring that it would not be required to pay a penalty under the WSIA. On the first day of hearing, counsel for the worker and for the employer submitted a joint proposal to the WSIAT under which the employer would not be required to pay a penalty, while the worker would nonetheless be eligible to pursue benefits from the WSIB following the WSIAT decision. The proposal included an agreed statement of facts which indicated that although the employer dismissed the employee for reasons related to the workplace injury and therefore contravened its re-employment obligation, the reason for termination was unrelated to any anti-compensation animus on the part of the employer and thus no re-employment penalty should be levied.
The WSIAT reviewed and accepted the joint proposal, deciding that no oral evidence was required and it was unnecessary to have a contested hearing on other issues.
Technical breach vs. merits and justice
The WSIAT has historically followed one of two divergent approaches to justify its refusal to levy a penalty on an employer for terminating employment in contravention of its re-employment obligation.
•The first approach is what has been referred to in WSIAT decisions as a “technical breach,” where the WSIAT deems that although the employee’s employment had been terminated prior to the expiration of its re-employment obligation, the reasons for termination were not related to the compensable injury. In these cases, the WSIAT has found that the breach was merely “technical” in nature and the employer therefore should not be subject to a re-employment penalty.
•The second approach engages the WSIAT’s discretion under the WSIA to refuse to impose a re-employment penalty if the merits and justice of a case so permit. This approach has been followed where the WSIAT determines that there was a breach of the re-employment obligation because the termination of the worker’s employment was in some way related to the injury, but that due to the specific circumstances of the case, no penalty should be imposed.
The WSIAT in this decision examined both approaches and determined that the concept of a “technical breach” was unnecessary. The WSIAT held that — contrary to prior decisions — if the termination is not in any way related to the injury, there is simply no breach of the re-employment obligation, “technical” or otherwise. Rather, a termination during the re-employment period must be in some way related to the injury for there to be a breach of the obligation. In such cases, the WSIAT may decline to impose a penalty on the employer if the imposition of a penalty would be inappropriate on the basis of the merits and justice of the case.
The WSIAT used its discretion to refuse to impose a re-employment penalty because the merits and justice of the case so permitted. The WSIAT accepted that, based on the agreed facts set out in counsel’s proposal, there was a breach of the re-employment obligation. However, it agreed that no penalty should be imposed on the employer because the employer’s reason for dismissal, although related to the injury, was unrelated to any anti-compensation animus.
In the future, similar decisions by the WSIAT to accept a mutually agreeable settlement could potentially save employers thousands of dollars in legal expenses, time spent before the WSIAT, and lost productivity — among other less-quantifiable costs — while also preserving judicial resources.
The WSIAT’s confirmation that the “merits and justice” approach to determining that no re-employment penalty should be levied settles years of divergence in the case law. And it’s a decision that could have far-reaching implications in workers’ compensation law for years to come. See Decision 54/14, 2016 CarswellOnt 4491 (Ont. Workplace Safety & Insurance Appeals Trib.).
