Canada: The Supreme Court Warns Employers To Think Twice Before Terminating An Employee On Long-Term Disability — Your Duty To Accommodate May Not Be Over Yet


At one point or another when dealing with cases of long-term disability, you have likely had to ask yourself the question, "How long is long enough?" After how many months or years an employee has been off sick do you have the right to terminate his or her employment? How long can you reasonably be expected to hold an employee’s job, and even maintain benefits, while the employee is unable to work?

To make this decision easier, it is not uncommon for employers to apply a standard period of time — 12, 24 or even 36 months — after which employment will be terminated if the employee is still not able to return to work. In unionized workplaces, this rule may be expressly written into a collective agreement and applied systematically as soon as the magic number is reached. In other cases, it may be set out in an employee policy or handbook. More commonly, employers may terminate employment once the employee no longer has the right to retain his or her job under the provincial labour standards legislation.

Until recently, arbitrators and courts generally upheld these automatic termination provisions, especially when negotiated into a collective agreement. Maintaining the employment for that length of time was considered, in and of itself, to be sufficient accommodation.

However, this issue came to the forefront when unions across the country began arguing that the automatic termination clauses in their collective agreements were contrary to human rights laws. More specifically, they argued that, in some cases, the employer’s duty to accommodate would require that the sick employee’s job be maintained for a longer period than that set out in the collective agreement, or that additional measures be taken to assist the employee in returning to work.

The Supreme Court Weighs In

The debate ultimately wound its way up to the Supreme Court of Canada in McGill University Health Centre (Montreal General Hospital) v. Syndicat des employés de l’Hôpital général de Montréal (MUHC). In its decision released in January 2007 (and as reported in our last edition), the court unanimously concluded that automatic termination clauses are valid but cannot be applied blindly in every case. Such clauses are a valid way of trying to promote regular attendance by employees, but they cannot operate so as to deprive a sick employee of the full extent of the accommodation to which he or she is entitled under human rights legislation.

An automatic termination clause is a factor to be considered in assessing whether the employer has met its duty to accommodate to the point of undue hardship. It is a significant measure of accommodation in itself, and depending on the length of the period provided, it may serve as useful evidence of the point at which the employer will begin to suffer undue hardship. That said, it does not definitively determine the accommodation to which an employee is entitled, and each situation must still be evaluated on a case-by-case basis. The dominant message in the court’s judgment is a warning to employers who seek to terminate an employee on extended sick leave. The duty to accommodate is always present and may require a longer period or additional measures in light of an employee’s specific circumstances.

You’re Not in it Alone

One important point reinforced by the Supreme Court in the MUHC decision is that accommodation is not a one-way street. Rather, it is a process in which the employer, the employee and, in unionized workplaces, the union, must collaborate to arrive at a reasonable compromise. Confirming the principles originally set out by the Supreme Court of Canada in Central Okanagan School District No. 23 v. Renaud, the court stated that an employee cannot expect a perfect solution and must co-operate with a reasonable proposal put forward by the employer or risk having his or her complaint dismissed.

What Does This Mean for You?

If you currently apply a maximum period of absence rule, whether in a collective agreement or otherwise, you should continue to do so. The rule may serve as an indication of reasonable accommodation, especially if it has been negotiated or has been established by reference to objective considerations.

It is also important that you clearly communicate to your employees that maintaining their employment for a specified period is a measure of accommodation on your part and not a punishment.

Keep in mind, however, that having such a rule in place will not shield you from the scrutiny of arbitrators, courts or tribunals if a terminated employee takes action. If the employee claims that his or her personal circumstances should have given rise to additional accommodation, you will have to prove that you met your obligation, notwithstanding the automatic termination provision.

Therefore, long-term disability files should be closely monitored throughout, and all accommodation measures should be well-documented. Also, before making the final decision to terminate an employee on sick leave, make sure that you have an up-to-date evaluation of the employee’s medical status and that you have made a last attempt to see whether additional accommodation measures could reasonably be extended.

For example, if the employee advises you at the expiry of the specified time period that he or she will be able to return to work on a progressive basis or within a short time, then you may be well-advised to bend the rules and avoid future problems. If, on the other hand, the employee is still completely unfit to work at the end of the specified time period, and there is no indication that the situation will improve in the foreseeable future, you may have reasonable grounds to conclude that your duty to accommodate has been satisfied.

Finally, don’t forget that the employee and the union (if there is one) must collaborate in the accommodation process.

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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