By Megan Burkett
Most companies would prefer to avoid terminating pregnant, disabled or older employees due to the risk involved. However, a company may be considering these terminations for reasons such as company restructuring, performance concerns or an employee failing to satisfy obligations under the accommodation process.
There are a number of initial steps a company should take to fully understand the risks of such terminations. This includes considering legal requirements, the financial exposure of the terminations and steps to take to avoid or minimize the risk.
Review legal requirements
The legal requirements for these terminations can include obligations under human rights, employment standards, workplace compensation legislation and/or increased exposure under the common law.
Terminating a disabled or older employee can result in discrimination under human rights legislation. There is a duty to accommodate an employee with a mental or physical disability, which can include providing the employee with a leave of absence and modifying the job when the employee is able to return to work. For older employees, mandatory retirement has essentially been eliminated across Canada with some limited exceptions. As a result, an employee cannot be forced to retire at age 65 and it is a violation of human rights legislation to discriminate on the basis of age.
In Ontario, there are essentially protected periods for leaves of absence, such as a pregnancy and parental leave, under the Employment Standards Act, 2000 (the “ESA”). There is a potential reprisal if an employee is terminated prior to, during or shortly after the leave. A company also has an obligation to reinstate the employee to their most recently-held position upon their return to work. If the position no longer exists, then the employee should be reinstated to a comparable position.
The Workplace Safety and Insurance Act, 1997, in Ontario has similar types of requirements, including re-employment obligations and, where a termination occurs within six months from the date the employee was re-employed, a presumption that the employer has not met those obligations.
Terminating during the time periods referenced above carry an increased risk. If a termination is being considered, waiting until the employee is outside of these protected periods is the safer option.
Damages
For common law termination entitlements, age is one of the main factors in assessing reasonable notice. As a result, termination packages for older workers are often larger. It can be more difficult for older workers to mitigate their damages and find employment.
For a short-service employee, the amount of compensation and damages that can be awarded under human rights legislation or for a reprisal under the ESA can be significantly more than the employee would receive compared to the common law.
Courts have the ability to award damages for a breach of human rights in addition to wrongful dismissal damages, general damages and punitive damages. The common range for damages for a breach of human rights in Ontario at the Tribunal or in the courts is $5,000 to $35,000, although there are cases with damage awards of significantly higher. Employees can also be awarded loss of wages until re-employment, loss of benefits and damages for injury to dignity and self-respect.
How to avoid or minimize the risk
There are a number of ways for a company to minimize its exposure and risk for a high-risk termination. Employment agreements with a termination clause can limit the common law termination amounts an employee may be entitled to.
Employee handbooks and company policies can offer legal protections to companies, including language regarding group insurance benefits during a leave of absence and when those benefits can be terminated, the reporting of absences from work, when medial documentation is required and obligations to return to work following a leave of absence.
Performance documents can be key to defending a case. There is a common misconception that warning letters and performance reviews will only be useful for a just cause termination. However, documents relating to performance issues can be very helpful in defending all types of legal proceedings, including human rights, employment standards, workplace insurance and/or court actions. If a company is alleging performance concerns as the reason for the termination, these types of documents are essential in proving those allegations.
Before making the decision to terminate, a company should consider the other options, including delaying the decision to a time when it is less risky to proceed. For those employees suffering from a disability and on a lengthy leave of absence, frustration of contract can be considered. With a successful case of frustration, only statutory termination entitlements have to be paid. No common law amounts are owed and, subject to the duty to accommodate, this can also protect against potential human rights violations.
With restructuring, other options to terminating an employee on a leave of absence are to delay the termination or notify the employee of the restructuring, but that their employment status would not be affected until they return to work. That way, there is not a negative impact on employment insurance or disability benefits compared to if the company had triggered the termination. Companies should also have documentation to support the restructuring and the decision behind the employees that were selected for termination as a defence to a claim.
If the decision has been made to terminate a high-risk employee, a company may want to consider providing a more generous termination package to encourage the employee to accept. Obtaining a proper release that covers all claims including the termination of benefits and human rights violations is important.
Megan Burkett is an employment lawyer with Keyser Mason Ball, LLP.