Federally regulated employers should be aware of new Canada
Labour Code (CLC) provisions requiring long term disability
programs to be insured with an insurance company licensed under the
laws of a province.
Effective July 1, 2014, all prospective LTD benefits offered to
employees covered by the CLC must be insured. Transitional rules
provide that the insurance requirements operate on a prospective
basis only. As a result, employers will not be required to purchase
insurance in respect of LTD benefits presently being paid or for
which an application for benefits has already been submitted.
Currently there is little regulation of uninsured LTD plans and
no requirement for employers to prefund for expected claims. The
insurance industry, on the other hand, is highly regulated. Once
the CLC changes come into force, affected employers will no longer
have the option of self-insuring LTD benefits.
The CLC amendments provide for the exemption of certain LTD
Plans in prescribed circumstances, however, regulations outlining
the basis for exemption have yet to be issued. The expectation is
that limited exemptions will be extended to certain health and
welfare trusts which prefund expected LTD claims using insurance
Beginning July of next year, employers can be required to
furnish proof to inspectors that their LTD plans are insured in
accordance with the new CLC requirements. To ensure compliance with
those new requirements, as well as other requirements in Part III
of the CLC, the maximum fine for most Part III violations will rise
to $250K from the current $5K.
As a result of these amendments we recommend that all federally
regulated employers offering uninsured (or self-insured) LTD
benefits take preliminary steps toward insuring their LTD plans as
soon as possible. Some plans may qualify for an exemption under the
regulations. However, given the public policy concerns involved, we
anticipate the number of exempt plans is likely to be quite
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
A former teacher at Bodwell High School has learned a valuable lesson from the B.C. Human Rights Tribunal— it is not discriminatory for an employer to offer child-related benefits to only employees with children.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
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