Terminating an employee on parental leave not impossible

Employees usually entitled to same position

Stuart Rudner

Can you fire someone while they are on maternity leave or when they indicate an intention to return to work after leave? The general rule is that an employee on maternity or parental leave is entitled to be returned to their position at the end of their leave, subject to the very narrow exception of situations where the position no longer exists. In such cases the employee must be placed in a comparable position.

The Ontario version of the Employment Standards Act sets out the duty as follows:

“The employer shall reinstate the employee to the position the employee most recently held with the employer, if it still exists, or to a comparable position, if it does not.” (emphasis added)

In this context one must also bear in mind the applicable Human Rights Code, which will prohibit discrimination on the basis of family status. Both of these statutes serve to protect the rights of employees that choose to take parental leave and to prevent an employer from penalizing them as a result of this decision. But they also infringe upon the ability of an employer to hire and fire employees in accordance with the company’s best interests.

A “very precarious” position for employers

Employers often ask whether they can terminate an employee because they realize, during the course of the employee’s leave, the employee in question is:

•not as efficient or effective as she could and should be;

•not as well-liked, by colleagues and clients, as her replacement; or

•otherwise less desirable than her replacement or some other individual.

A company may discover the replacement is able to answer the phones, do all the typing and filing, and balance the books, whereas the employee on leave was never able to do much more than just type and file. Not surprisingly the company would prefer to keep the replacement on and either re-assign the employee when she returns from leave or simply terminate her employment.

I have generally advised clients in such situations that they would put themselves in a very precarious position by doing so. In my view, any of the examples listed above involve terminations or transfers that are undertaken as a result of the taking of the leave. As a result they would be contrary to the legislation.

If, however, the contemplated termination occurs due to reasons entirely unrelated to the leave then it is allowable. A legitimate reorganization or downsizing may eliminate the employee’s position. (To be clear, a legitimate re-organization does not involve simply giving the position in question a new title.) But terminating an employee on leave, or returning from leave, will almost inevitably lead to litigation even if the termination was for valid reasons.

The question often boils down to “is the termination a direct result of the leave?” Two recent cases, from opposite ends of the country, provide examples of terminations that were found not to violate the applicable legislation. In both cases, the employee in question was terminated at or near the end of her parental leave period, when she expected to return to work.

New Brunswick court upholds termination

The first case, Palmer v. Godfrey Associates Ltd., involved the termination of a bookkeeper and business administrator as a result of a breach of duties that was only discovered while the employee was on leave. The claim alleged breach of contract and a violation of the Employment Standards Act and the Human Rights Code.

Karen Palmer’s job was to prepare monthly invoices and, once they had been approved, send them out to clients along with any supporting documentation. She would then post the invoices into the accounting records. On a weekly basis she was to print a list of aged accounts receivable and deliver it to the president, who understood that all accounts on the list had been sent out to the client unless Palmer advised otherwise.

Shortly after Palmer started her maternity leave the president discovered problems with two client accounts. He eventually determined 30 invoices, totalling more than $70,000, had been posted by Palmer but never sent to the clients. She insisted she had sent them out but her evidence was not believed. The trial judge held the company had just cause to terminate Palmer’s employment, and that the termination was neither in bad faith nor in violation of her leave-related rights.

This case is interesting because many of the common examples of improper terminations involve the termination of an employee due to facts that are only discovered during the period of leave.

For example, an employer might discover the employee’s replacement is twice as efficient, or more proactive, and decide it does not want the employee on leave to return. In this case, however, the termination was found not to have violated the rights of the employee.

The distinction, arguably, is that in those examples the grounds for dismissal were only discovered because of the leave; if the employee had not gone on leave, there would have been no replacement, and therefore no comparison. In Palmer, the grounds — failing to send out the invoices — were independent of the leave and it was mere chance that they were discovered during the leave period.

B.C. Human Rights Tribunal hands down “surprising” decision

The second case is the decision of the British Columbia Human Rights Tribunal in Knelsen v. Premium Pellet Ltd. In this case the parties apparently agreed that if any part of the company’s decision to terminate Abe Knelsen’s employment was the fact he took parental leave, then the company would have acted in a discriminatory fashion contrary to the Human Rights Code.

Knelsen started working for the company on July 6, 2001. He was hired by the plant manager, Frank Wall, a friend of the family. Three months later, on Oct. 5, 2001, Knelsen was laid off due to a shortage of work. For whatever reason (it was never fully explained in the decision) Knelsen was ineligible for employment insurance (EI) benefits due to the layoff and was advised to apply for parental benefits instead, which he did.

He was told he qualified for such benefits on Nov. 9, 2001. On Nov. 16, 2001, Wall called him to recall him to work on Nov. 19. Knelsen did not respond and Wall called him again on Nov. 19. At that time, Knelsen said he would not come in to work because he was on parental leave. Knelsen did not advise as to when he would return to work. Wall was not impressed.

In January, 2002, Knelsen was asked to contact Wall and advise him of his plans. Knelsen did not do so. He testified he felt no obligation to keep in touch with his employer because he had already advised of his intentions (although he had, in fact, not done so).

While on leave Knelsen worked part-time doing maintenance at an apartment building. In the course of doing so he twice injured his back. On the second occasion he filed a claim with the Workers’ Compensation Board.

In his application for workers’ compensation benefits he wrote he was presently on parental leave from Premium Pellet Ltd. and that he would like to go back to work, but he can’t due to a back injury. His claim for lost wages was rejected as the board did not believe he intended to return to work early.

Knelsen’s parental leave EI benefits ended on July 10, 2002. But he did not call Wall until July 22, at which time he advised he was ready to return to work. This was the first conversation between them since Nov. 19, 2001. The two had a testy exchange during either that phone call or a subsequent one a few days later. Wall was frustrated with Knelsen’s behaviour and he was of the view Knelsen did not really want to return to Premium Pellet. This view was reinforced when Knelsen confirmed rumours he had been looking for other employment.

Premium Pellet decided to terminate Knelsen’s employment. Its reasons included Knelsen’s failure to communicate with respect to his leave, his working for another employer during the leave and his apparent lack of desire to work for Premium Pellet. Knelsen brought a claim for violation of the Human Rights Code.

The tribunal framed the issue before them as whether any part of the decision to terminate Knelsen’s employment was the fact he took parental leave. Somewhat surprisingly, despite such a low threshold, the tribunal found that the decision to terminate did not violate the code.

Rather, it found that circumstances had led Wall to conclude that Knelsen was not an asset to company. These circumstances included the failure to give notice of his intention to take parental leave, the failure to keep in touch during the leave, despite being asked to do so, working for another employer while on leave, looking for other employment while on leave and failing to call and advise that he intended to return from leave.

What is interesting about this case is that a strict “but for” test would still lead to a conclusion that the decision to terminate Knelsen was based upon his taking leave. But for the taking of parental leave, none of the circumstances which led to the termination would have existed. Nevertheless, the tribunal found the employer had not contravened the act.

In my view this is a sensible decision. Knelsen has only himself to blame for the loss of his job. Had he conducted himself in a considerate, professional manner and treated his employer with appropriate courtesy and respect, he would still have a job.

Nevertheless I would be cautious in relying upon this decision in order to conclude employers will only be found liable when they terminate an employee because they took leave.

Other case law seems to go further and prohibit termination for any grounds arising out of or resulting from the taking of the leave. The distinction may be that the Knelsen claim was only brought pursuant to the Human Rights Code, and not the Employment Standards Act.

The cases above, while quite different, serve the purpose of demonstrating that employers can terminate the employment of an employee on, or returning from, parental leave. But one does so at one’s own risk.

The courts will, despite the decisions discussed above, view such terminations with a skeptical eye. Whether the termination is due to the elimination of the position in question along with a lack of comparable positions, or for non-leave related just cause, the courts will carefully examine the circumstances.

For more information see:

Palmer v. Godfrey Associates Ltd., 2004 CarswellNB 199 (N.B. Q.B.)

Knelsen v. Premium Pellet Ltd., 2004 BCHRT 55 (B.C. H.R.T.)

This in-depth look at parental leave was provided by Stuart Rudner. He prices civil litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672 or via email at [email protected].

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