This newsletter discuses two recent employment law decisions that have important implications for employers to know when terminating employees.
Long-Term Disability Benefit Entitlement After Termination
A Saskatchewan court recently decided that an employer was liable for a former employee’s Long-Term Disability (“LTD”) benefits after failing to continue benefit and LTD coverage throughout the notice period.
In Pasap v Saskatchewan Indian Gaming Authority and Bear Claw Casino, 2022 SKQB 200, the employee worked for Bear Claw Casino for five years as the Facilities Manager. As part of his employment, the employee was entitled to LTD benefits. After five years of employment, the employer gave the employee the ultimatum of being termination or resigning, so the employee resigned. The Court determined that this was effectively a termination and not a resignation. The employee was awarded 8 months of pay in lieu of reasonable notice of termination.
Four months after the employee’s termination, the employee suffered a severe medical incident, which rendered him “totally disabled,” within the meaning of the employer’s LTD benefits plan. Had the employee not been terminated, he would have been eligible for and received LTD benefits. Since the employer had not continued the employee’s benefits and LTD throughout the notice period, the employer was found liable for LTD benefits until the employee turns 65. This totaled $1,216,764 for LTD coverage.
This case is an important reminder to employers that offering employees an appropriate notice period and continuation of benefits through the notice period can mitigate potential future risks. While this case was before Saskatchewan courts, the reasoning can be applicable in Ontario. If you have questions regarding benefit and Long-Term Disability coverage during an employee’s notice period, the lawyers at Heeney Vokey would be happy to assist.
What does it mean to mitigate damages?
The Ontario Court of Appeal recently reversed a decision where the trial judge reduced an employee’s entitlement due to improper mitigation efforts. In Lake v La Presse, 2022 ONCA 742, the employee managed the sales team in the employer’s Toronto office. However, when the Toronto office closed, the employee was terminated without cause. The employee remained unemployed for two years, despite her efforts to mitigate.
The trial judge found that the employee was entitled to 8 months of pay in lieu of reasonable notice of termination but reduced the notice period because the employee “aimed too high” when applying for jobs. The Court of Appeal found that the obligation of a terminated employee in mitigation is to seek “comparable employment.” This means that the employment position should be comparable in role, hours and remuneration.
The appellate court disagreed with the trial judge and found that the Plaintiff applied for comparable employment positions and was not obligated to apply for anything less.
The onus is on the employer to show that an employee did not properly mitigate their damages. The employer must show that there are comparable employment positions available and that if the employee applies for the position, they will obtain the job. An employee is not required to apply for employment positions that are not comparable to their previous position.
If you have questions about a terminated employee’s mitigation efforts, please contact the lawyers at Heeney Vokey.