Canada: Case Comment: Can An Employer Cancel A Termination?

Last Updated: March 18 2014
Article by Lisa Gallivan and Alison Strachan

A recent decision from Newfoundland and Labrador, Roche v. Sameday Worldwide 2014 CanLII 8782 says you can. 

What happened?

In November 2008 an outside sales representative, with 29-years' service ("the plaintiff") was advised she was being removed from her position. She was given the option of two alternate positions (an inside sales position and an accounts receivable position) at less pay. A severance package was also discussed.   Before the employee accepted any option she went on sick leave for major depression and received short-term disability, followed by long-term disability ("LTD"). Her LTD  ended on August 28, 2009 when a Claims Specialist wrote to her saying she did not provide sufficient  medical information for it to continue. This letter was copied to the employer's Disability Management Coordinator.

What happened next in September 2009 was, in essence, a "perfect storm".  To. make a long story short (for the longer version read pages 15 – 23 of the decision), here is essentially what happened

  • The employee's LTD claim was closed and her benefits ended in late September;
  • The employer wrote to the employee and asked her to contact her supervisor about a return to work (she did not);
  • The employer made inquiries of the insurer as to whether she had appealed the LTD decision (and was told she had not);
  • The employer finally advised the employee to contact her supervisor or have her employment terminated (she did not); and finally,
  • The employee was terminated (however in the meantime she had filed what was eventually a successful appeal of her LTD denial).

The employee sent a letter to the employer asking them to "re-consider" the termination and requesting her benefits be re-instated as soon as possible. The benefits were reinstated by the employer "to bring to an immediate stop the internal company paperwork necessary to give effect to the termination of [the employee's] employment. Unfortunately, communication issues did not end there, the employee claimed she was terminated in October when ordered to return to work. The employer however continued to treat her as an employee  during that time.   For example, employer contributions continued to be made.

The employee sued for wrongful dismissal.

In response the employer said the plaintiff had not been dismissed, but remained an inactive employee on long-term disability. The employer alternatively argued that if the Court determined the plaintiff was dismissed on October 2, her dismissal was for cause or as a result of frustration.

What did the Court say?

The termination letter was sent in error and the employer took immediate steps to revoke the dismissal before it could be given effect. The plaintiff, through her actions in requesting and accepting the health benefits, and in accumulating pensionable time continued to act as an employee of the defendant. The contract of employment was not repudiated when the employee issued her statement of claim, nor was it frustrated by the plaintiff's illness. Why was employment not repudiated?

Termination by ultimatum?

  • No.
  • The termination letter was sent in error.
  • The employee asked the employer to reinstate her medical benefits "knowing that these benefits are only available to employees of the defendant" and the defendant complied and continued paying premiums for those benefits.
  • The employee continued to accumulate pensionable time as an employee of the defendant and paid both the employee and employer contribution without question from the employee.

Termination as a result of the employee filing her Statement of Claim?

  • No.

...[the employee] has continued to receive Blue Cross benefits and accumulated pension benefits as an employee of the defendant, uninterrupted by the issuance of her Statement of Claim. She rem ained a willing recipient of these benefits and the defendant a willing contributor. In short there is nothing to suggest that either [the employee] or the defendant treated the employment relationship as repudiated by this law suit per se.


  • No.

As I have concluded that [the employee] was not dismissed on 2 October 2009, the question of whether there would be justification for dismissal on account of her illness does not arise. Frustration of contract is only available to the defendant as a defence in circumstances where there has been a termination of the employment relationship. That did not occur...

What this means to you?

To avoid the "perfect storm" that existed in this case, employees and employers, must clearly communicate during periods of disability. This case underscores that a disability management plan must also provide for an internal communication system or strategy that pays attention to disability appeal period timelines (including any possible grace periods) before termination occurs.  And, if an employer learns of an appeal within a reasonable period after sending a final termination letter, it would be wise to take corrective action to rescind the termination.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Lisa Gallivan
Alison Strachan
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