Terminating employees on job-protected leave (Toughest HR Question)

If an employer has to cut a worker’s job, how should it proceed to avoid liability?

Question: If an employer has to cut the job of an employee who is on a job-protected leave due to unavoidable financial reasons, how should it proceed to avoid liability?

Answer: Employers are entitled to eliminate positions due to bona fide business reasons — even positions held by employees who are on leaves protected by employment standards legislation, such as maternity leave and compassionate care leave. 

It is critical, however, that the employer is able to prove the elimination of the position is for a bona fide reason, such as an economic downturn, and not for any reason related to the fact the employee is on a protected leave. 

If a worker brings a complaint that the elimination of her position was discriminatory, in many provinces the onus is on the employer to show there was no discriminatory reason for the dismissal. 

It is therefore essential that before a position is eliminated, the employer ensures it can identify and produce the business records that demonstrate the financial need for the decision to abolish a job.

A job that is eliminated due to a financial downturn is still a dismissal without cause under employment standards legislation and the common law. As such, an employer is required to provide notice of termination or pay in lieu of notice. 

For employees who are on a statutory leave, such as parental leave or compassionate care leave, notice of termination cannot run concurrently with the job-protected leave. 

Practically speaking, this means the employee must be allowed to complete his leave and pay in lieu of notice must be provided at the conclusion of the leave, assuming the job was abolished during the leave. 

A best practice for employers that need to eliminate the job of an employee on a protected leave is to advise the employee as soon as possible to give her a fair opportunity to consider new job opportunities while on leave. 

At the same time, advise the employee that he will be provided with pay in lieu of notice at the conclusion of his leave (again, assuming the job is abolished before his leave ends). 

While employees are entitled to minimum statutory pay in lieu of notice upon their termination, they may also be entitled to additional pay in lieu of notice under the common law. 

In such cases, I recommend obtaining a general release for any severance paid in excess of the statutory minimum. The release is best executed by the employee at the conclusion of the statutory-protected leave.

For employees who are on a disability leave that is not protected by legislation (for example, long-term disability that exceeds the period of time protected by legislation), an employer can provide notice of termination while the employee is on leave. That notice can run concurrently with the leave.

Meghan McCreary is a partner practising labour and employment law at MacPherson Leslie & Tyerman in Regina. She can be reached at (306) 347-8463 or [email protected].

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