Totally Disabled Employees entitled to LTD benefits and Termination Pay

Mar 19, 2019

If you are totally disabled and collecting disability benefits from a LTD insurer, did you know that your employer may also owe you up to 34 weeks termination & severance pay?

How can this be you may ask?

Well, the short answer is there is a provision in a regulation under Ontario’s Employment Standards Act which states you are entitled to termination pay and severance pay if your employment is “frustrated” as a result of an illness or injury.

Now you may be wondering, when is your employment is “frustrated”? Basically, it means there is no reasonable likelihood of you returning to work within a reasonable time. You generally need a medical note from a doctor to this effect to prove that your employment has been frustrated.

So, if you have been off work collecting LTD benefits, you are still employed, and your medical condition is not improving, then you may want to take the position that your employment has been “frustrated.”

For example, if you have been employed for more than 26 years and your employer’s payroll is over $ 2.5 million, then you are entitled to 8 weeks termination pay and 26 weeks severance pay if your employment has been frustrated.

In a recent case, an employee took the position that his employment had been frustrated.

In September 2005, Ronald Hoekstra started working for Rehability Occupational Therapy Inc. which has a payroll of over $ 2.5M.  

In December 2008, Mr. Hoekstra started a medical leave of absence. He returned to work in September 2009 and worked until May 2012, when he went on sick leave until September for a month and then he went off on sick again in October 2012. He didn’t return to work because he suffers from severe esophageal and stomach conditions. In 2016, his doctor responded to the question: “has your patient shown improvement where gradual or full-time return to work is viable?” with  “no” and stated: “ongoing disability since 2008 unlikely to return to work now.” A year later, in 2017, he provided the same response. Shortly thereafter, Mr. Hoekstra took the position his employment was frustrated in October 2016.

A judge concluded Mr. Hoekstra’s employment was frustrated and awarded him 8 weeks’ termination pay and about 11 weeks’ severance pay plus $ 15 000 in legal costs.

Before deciding whether to take the position that your employment has been “frustrated” speak with an employment lawyer about your situation.

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

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