Terminating employee on sick leave

Does termination while off sick create extra severance entitlement?

Colin Gibson

Question: One of our employees was hurt in a non-work-related accident. She provided a doctor’s note stating that her ankle is sprained and went on unpaid sick leave. We don’t want her back for a number of reasons, including poor attitude and performance. We are a non-union company, so under our Labour Standards Act, she would be entitled to six weeks’ notice or pay in lieu if we terminated her employment. Does she have any other entitlements?

Answer: It is important to recognize the provisions contained in employment standards statutes dealing with termination of employment are minimum standards only. An employer may have other statutory, common law and contractual obligations in an employee’s dismissal.

Where an employer terminates a non-union employee without cause, it must not only give the employee the notice or severance compensation that is required by the applicable employment standards legislation, but it must also provide the amount of notice or compensation in lieu of notice that is required by the contract of employment. If no written contract exists that deals with termination, the employer will be required at common law to provide reasonable notice of dismissal, or compensation in lieu of notice.

Employers must also be careful to ensure they comply with applicable human rights legislation, which prohibits the employer from dismissing or discriminating against an employee on a number of prohibited grounds.

It is often risky for an employer to dismiss an employee who is on sick leave. In some Canadian jurisdictions, dismissing an employee on sick leave is prohibited by employment standards legislation. Also, the human rights statutes in all Canadian jurisdictions prohibit an employer from discriminating against or dismissing an employee because of a physical or mental disability.

Where an employer terminates an employee who is on sick leave, a human rights complaint is often filed. To defend such a complaint successfully, it will usually be incumbent upon the employer to show that its dismissal decision was not influenced in any way by the fact that the employee was disabled. This is often a difficult burden to meet.

The dismissal of an employee on sick leave can also expose an employer to additional damages if the employee chooses to pursue an action in court. There are numerous decisions where judges have disapproved of the behaviour of employers who have dismissed ill or disabled employees and have awarded significant damages accordingly.

There are some situations where it is appropriate for an employer to dismiss an employee who is absent on sick or disability leave. For example, if the employee has been off for an extended period, and the medical evidence indicates there is no prospect for recovery in the foreseeable future, the employer may be justified in terminating the employment relationship due to frustration of the employment contract. Another situation would be where the disabled employee’s position has been eliminated because of restructuring or downsizing. In such circumstances, however, it will be important to ensure the decision to terminate the employee’s employment can be justified for reasons unrelated to her disability.

In the situation described above, terminating this employee while she is on sick leave is likely to generate a human rights complaint or a wrongful dismissal claim. The better course of action would be to allow the employee to return to work when she provides medical certification that she is fit to do so, and then meet with her to discuss your concerns regarding her performance and behaviour. It will be important to provide specific and supportable examples and the employer’s expectations regarding her performance and behaviour moving forward, followed by monitoring her compliance with those expectations. If she fails to meet them, you can then proceed to terminate the employment relationship at an appropriate future time.

Colin G.M. Gibson is a partner with Harris &Company in Vancouver. He can be reached at (604) 891-2212 orcgibson@harrisco.com.

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