Termination Pay for Employees who Cannot Work Because of a Total Disability

If you are totally unable to work because of a medical disability are you entitled to receive termination pay? That is the question considered in this blog.

Employees Who Do Not Have LTD Coverage

Sometimes, an employer does not provide disability insurance and in this scenario, if you cannot work because of a non-work related injury or illness, then you will generally be placed on a medical leave and you may be eligible to collect employment insurance benefits for a relatively short period of time.

Employees who Have LTD Coverage

Some employers offer long-term disability (“LTD”) insurance to employees who are totally disabled. If approved, then LTD benefits can last until you are 65 years old.  Often, the definition of “totally disabled” changes under the LTD policy after two years and the new definition requires you to prove that you are medically unable to work in most positions. At this point in time, some employers decide to cut off health, dental and other group benefit coverages. The legality of this decision will be the subject of another blog.

What is Frustration of Employment?

There are times when a total disability leads to the frustration of an employment contract. A contract of employment is generally frustrated when “there is no reasonable likelihood of the employee being able to return to work within a reasonable time.”

How to Prove Employment Has Been Frustrated

To prove that your employment has been frustrated because of a disability, the person making the claim must generally have medical evidence which shows that “there is no reasonable likelihood of the employee being able to return to work within a reasonable time” or words to that effect.

Who Can Claim Your Employment Has Been Frustrated?

Either you or your employer can take the position that your employment has been frustrated.

Why Would You Claim that Your Employment Has Been Frustrated?

Sometimes it is in your interest to claim that your employment has been frustrated and sometimes it is not. It depends on your circumstances and you should obtain legal advice before making a decision.

If, for example, you have been employed for at least 8 years, have a total disability, are not eligible for LTD benefits, and there is no reasonable prospect that you ever will be able to work again, then you may want to claim your employment has been frustrated because you may be entitled to 8 weeks termination pay and up to 26 weeks severance pay under the Employment Standards Act. In this situation, your employer may not take the position that your employment has been frustrated or disagree that your employment has been frustrated because it does not want to pay you this termination pay and severance pay.

For 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employees on all aspects of the employment relationship. If you have any questions, you can contact him at 416 317-9894 or at [email protected]