Disability and dismissal – LTD benefits and wrongful dismissal
For many people, the first thing that comes to mind when seeing the words "disability" and "dismissal" in the same sentence is discrimination. And while discrimination and human rights related issues are important to consider when dealing with the dismissal of an employee who is or may become disabled, it is not the only issue to consider. An employee's entitlement to long-term disability (LTD) benefits may also impact an employer's obligation to provide wrongful dismissal damages.
Below we discuss two recent cases that consider this very issue.
Disability at the time of termination – Amerato v. TST-CF Solutions LP, 2022 ONSC 5339
Facts:
In this case, the employee, Cassandra Amerato ("Ms. Amerato"), suffered a concussion which impacted her ability to work in June 2020. In December 2020, she was approved for LTD, where she received benefits in the amount of 60% of her salary of $58,904.95.
In January 2021, Ms. Amerato was advised her employment was being terminated effective February 1, 2021. At that time, she was also offered a different position with the employer, TST-CF Solutions LP ("TST"), with similar duties but a 20% decrease in pay.
To mitigate her losses, Ms. Amerato accepted the alternative position. In this role, she worked part time and earned $276.92 per week. She continued to receive a top-up from her LTD insurer to ensure she received 60% of her pre-disability income of $58,904.95. Meaning, as a result of the LTD top-up, Ms. Amerato received the same amount in her new role as she had at the time of termination.
TST argued that the Court should not award Ms. Amerato any damages for wrongful dismissal, as Ms. Amerato was collecting LTD benefits before and after the termination, and the total income she received in income and benefits did not materially change following the termination.
Outcome:
The trial judge awarded Ms. Amerato wrongful dismissal damages and did not apply any deduction for the LTD benefits received by Ms. Amerato.
Analysis:
The trial judge held that the issue of whether disability benefits received during the notice period following dismissal ought to be deducted from the award of damages is to be determined by the terms of the employment contract and the intention of the parties. He differentiated between the caselaw dealing with the following:
- Disability plans set up by and fully funded by the employer: Wrongful dismissal damages have been reduced due to the disability benefit; and
- Disability plans provided by an insurer where the employee contributes to premiums: Wrongful dismissal damages tend not to be reduced. As the employee contributes to the premiums, it can be inferred the parties did not intend the disability benefits to be deducted from damages for wrongful dismissal.
Since Ms. Amerato had contributed to her LTD premiums, the trial judge concluded the benefits should not be deducted.
Takeaways:
This case provides a good reminder that an employer won't necessarily be off the hook for reasonable notice entitlements simply because an employee receives LTD benefits. Whether or not the LTD benefits can be deducted from the reasonable notice entitlements may depend on a number of factors including who paid the premiums and whether or not the employee will even be entitled to LTD benefits following their termination.
Disability following termination – Pasap v. Saskatchewan Indian Gaming Authority and Bear Claw Casino, 2022 SKQB 200
Facts:
The employee, Chadwick Pasap ("Mr. Pasap"), was a Facilities Manager for the Saskatchewan Indian Gaming Authority ("SIGA"). He received a base salary, as well as group employee benefits, which included LTD coverage.
On August 17, 2012, Mr. Pasap was effectively terminated after he was issued an ultimatum to resign or be fired. Four months after his termination, in December 2012, Mr. Pasap suffered a catastrophic medical event that resulted him being hospitalized for 25 days and undergoing multiple serious surgical interventions. It was accepted by the trial judge that following his release from hospitalization Mr. Pasap was not capable of performing the duties of his occupation and required regular ongoing care from his physician.
At trial, Ms. Pasap argued he was totally disabled as defined by his LTD plan, that the disability occurred during his reasonable notice period when his LTD benefits should have been in place but for the wrongful termination, and thus that he was entitled to his total claimable LTD benefits for his lifetime of approximately $1.2 million.
Outcome:
The trial judge agreed with Mr. Pasap and awarded him just over $1.2 million in wrongful dismissal damages, as well as $25,000 for moral damages and $25,000 for punitive damages.
Analysis:
The trial judge first held that Mr. Pasap was entitled to 8 months of reasonable notice, meaning the catastrophic medical event occurred squarely with his notice period. The trial judge then considered the medical evidence concerning Mr. Pasap's current condition and predicted ability to return to work. He concluded that Mr. Pasap was totally disabled within the meaning of the LTD plan and that this occurred during his reasonable notice period, such as to trigger an entitlement to LTD benefits. Finally, the trial judge concluded Mr. Pasap remained totally disabled to the date of trial.
On that basis, the trial judge held Mr. Pasap was entitled to damages in lieu of his lost disability benefits until he was 65, less approximately $66,000 for miscellaneous income which he was able to earn.
Takeaways:
It is important to keep in mind this case is from Saskatchewan, not Ontario, and the facts are extreme. However, it is a useful reminder that employers should proceed with caution prior to terminating an employee's benefits on a termination. In Ontario, employers should ensure they continue benefits for at least the minimum statutory notice period or, if not permitted by the applicable benefit plan, provide compensation in lieu of benefits. Whether or not employers have an obligation to continue benefits during an employee's common law reasonable period may depend on the terms and conditions of their contract, the applicable policy languages, and the unique facts.
Conclusion:
Terminations can be tricky. This complexity can be increased if a LTD benefit claim comes into play. Employers and employees alike are encouraged to seek legal advice when dealing with a termination and benefit continuation. Lee Workplace Law would be happy to answer any questions you may have.
