Law Times

Law Times • November 14, 2011 FOCUS PAGE 13 Cases show risks of cutting disability benefits Ongoing matter deals with bank manager terminated during illness BY KENNETH JACKSON For Law Times the reasonable notice period do so at their peril, says the lawyer for a woman fi red by one of the country's banks. Deborah Howden of Shibley Righton LLP says the bank could be on the hook for hundreds of thousands of dollars in lost ben- efi ts in a wrongful dismissal claim because it didn't arrange for tran- sitional disability benefi ts prior to terminating her client. According to Howden, while E most disability insurers cut off coverage once the company lets someone go, smart employers cover themselves by negotiating an agreement with the former employee to cover benefi ts dur- ing the reasonable notice period. Th ose that don't do so risk be- coming the insurer themselves, she warns. "Employees who are off work because of a bona fi de disability and are not paid dis- ability benefi ts during the period of reasonable notice may be able to claim the value of the lost dis- ability benefi t from the employer. In order to protect an employer's interests, an employer will nego- tiate transitional disability cover- age during the reasonable notice period so that the employer does not become an insurer." Howden couldn't get into par- ticulars by identifying her client or the bank because the wrongful dismissal claim is expected to go to mediation next month. "Th e facts are outrageous from an employment law per- spective," says Howden, who explained the facts of the case in a recent issue of Canadian Em- ployment Law Today. Th e single mother from To- ronto began her career with the bank in 1990 as a teller but rose through the ranks to become branch manager by 2001. She kept that job until her termina- tion in July 2006. Her health problems didn't begin until 2005 when her kid- ney began acting up. She was diagnosed with diabetes as a child, but it never aff ected her work until then. Her doctor sent her in for diagnosis, testing, and treatment. Howden argues her client took pains to arrange appoint- ments and treatments around her work schedule. If there was a confl ict, she claims she told her boss in advance. To ensure there would be no problems, she also provided medical notes. It didn't take long before she received her fi rst written warning about her absenteeism. Th e letter failed to mention her failing kidney and ongoing treatment. In the meantime, the woman spoke with her supervisor and was allegedly told that if she needed treatment, she'd have to do it around work hours. How- den's client claims she said she'd try but couldn't keep up with the Untitled-4 1 mployers that cut off ter- minated employees from disability benefi ts during stiff demands. Still, she pro- vided advance warning for the times she'd be away. She then received another written warning about her 11 absences over the previous year. She was told she'd lose her job if she didn't improve her atten- dance to the bank's standards. A few months later, her con- dition took a turn for the worse when she became very ill. Her kidney diffi culties caused severe dehydration, vomiting, and other issues. She was hospitalized and went on short-term disability. Despite her doctor's recom- mendation against going back to work in June, Howden's cli- ent insisted on doing so for fear of losing her job. A meeting with a return- to-work facilitator and a bank representative took place on June 30, 2006. Her fi rst day back would be July 11. It was clear, according to the plaintiff , that she was continuing treat- ment and there could be fur- ther complications. On her fi rst day back, the bank allegedly fi red her without warning or notice. Her replace- ment began work the same day. Th is suggests "the bank was simply awaiting her return from sick leave to dismiss her from employment," says Howden. None of the allegations, how- ever, have been proven in court. Th e woman always had long-term disability insurance coverage, but the bank alleg- edly cut it off when it fi red her. After her termination but during the reasonable notice pe- riod, the single mother became "totally" disabled. She had acute renal failure and other complica- tions. She started hemodialysis three times a week for four hours at a time in December 2007. It was so bad that she got a kidney and pancreas transplant in September 2009. She's now permanently disabled and can't return to work. "She has de- pleted all of her savings to live and lives on CPP at this point," says Howden. Recent case law shows em- ployers can face signifi cant liabil- ity if they provide only the bare minimum under the Ontario Employment Standards Act to an employee following termination. In Brito v. Canac Kitchens, Luis Olguin was 55 years old when the employer let him go after 24 years with the com- pany. It gave him a severance package that included eight weeks of disability benefi ts, but 16 months later he was di- agnosed with cancer. Based on his time with the company, the late Superior Court justice Randy Echlin determined that Olguin's reasonable notice period was 22 months. "Canac consciously chose not to make alternative arrangements to provide its loyal, long-service employee with replacement dis- ability coverage. Rather, it chose to go the 'bare minimum' route," said Echlin in his Feb. 18, 2011, decision. "It provided only the statutory minimums in pay and benefi ts and then gambled that he would get another job and stay well. When it lost that gamble, it chose to litigate this matter for over fi ve years." He further described Canac's treatment of Olguin as "cava- lier, harsh, malicious, reckless, outrageous, and high-handed." Olguin received about $200,000 in damages for the value of his benefi ts up until the age of 65. But Echlin didn't stop there. He ordered Canac to pay $15,000 for playing "hard- ball" and another $125,000 for Olguin's legal fees. For her part, Howden be- lieves employers should take extra care when considering the termination of an employee on disability or who has recently come back from it. "Employers should fi rst as- certain whether the employee has a contractual or common law right to disability cover- age," she says. In Howden's view, prudent will employers give the em- ployee a period of working no- tice so that the disability cover- age continues. "A less attractive option is to give the employee pay in lieu which enables him or her to replace the benefi t," she says. Ball Professional Corporation Excellence in Employment & Labour Law • Counsel in Leading Cases • • Author of Leading Treatise • Wrongful Dismissal Employment Law Human Rights Post Employment Competition Civil Litigation Appellate Advocacy Disability Referrals on behalf of employees and employers respected 82 Scollard Street, Toronto, Canada, M5R 1G2 (416) 921-7997 ext. 225 or srball@82scollard.com Contact Stacey Ball at web: www.staceyball.com all_LT_Nov7_11.indd 1 Ownership notwithstanding, your business is our business. The most productive relationships are born of mutual understanding. That's why we're as committed to getting to know our clients' business as we are to helping them understand the intricacies of labour and employment law. Toronto 416.408.3221 I www.lawtimesnews.com London 519.433.7270 I filion.on.ca 7/8/08 10:44:18 AM 11-11-08 11:44 AM

• Cover
• IBA Censored?
• Law Matures
• Focus On Labour and Employment Law