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Can I Be Fired If I’m Collecting Disability Benefits?

The answer to this question is yes. And no.

If you have made a claim for disability benefits, you may be curious as to whether your employment can be terminated by your employer. Many claimants believe that making a claim for disability benefits automatically protects them from a termination of their employment. 

It is not uncommon for employers to terminate employees on disability as part of a “general restructuring” process. (Unfortunately, this is often an easy way for employers to disguise the termination of an employee on disability as “legitimate”.)  

If a company is indeed going through organizational changes and a termination forms part of an overall restructuring process, the termination may not be wrongful or discriminatory provided the employer has offered the appropriate severance package as required by law and the decision to terminate was in no way motivated by disability.

However, other circumstances and scenarios exist where the termination of an employee who is on a disability leave can be deemed to be both wrongful and discriminatory.

Just Cause Termination

You may have been told by your employer that you are being terminated for “just cause”. To support this termination, your employer may be relying on instances of poor performance, frequent absenteeism, lack of appropriate communication or insubordination.

If it is determined that there is, in fact, “just cause” for termination, the employer is not obligated to pay out termination or severance pay under the Employment Standards Act or any pay in lieu of notice under common law. 

Proving termination on the basis of “just cause” is a high threshold for the employer to meet. If your employer has alleged “just cause” as the reason for termination, it should be carefully examined especially if you are suffering from any kind of disabling medical condition.

If your conduct in the workplace is in any way due to medical issues, your employer will have a very hard time supporting a “just cause” termination. Substance abuse and addiction can, for example, result in workplace absenteeism, poor performance and erratic behaviour. Addiction is a recognized disability and employees struggling with addiction are entitled to support and accommodation.

Human Rights Violation

If your employment was terminated for any reason that is directly related to your disability, there is a strong possibility that the termination would be considered a human rights violation. Even if the decision to terminate was based in part on a prohibited ground such as disability, it could be found to breach human rights legislation. The following scenarios might provide some guidance in determining whether the termination was in part or entirely due to disability: 

  • Your employment was terminated soon after you indicated you were pursuing a disability claim or as you were transitioning from short term to long term disability;
  • Before you went on disability, your employer treated you differently from other employees, such as denying a request for time off or reprimanding you for challenges you encountered while performing your job due to medical issues;
  • Your employer refused reasonable requests for accommodation and then terminated your employment soon after you requested information regarding disability benefits.

To prove that your termination was based in whole or in part on disability, you must establish that your employer knew that you were dealing with medical problems. Although you are not required to reveal the full nature of your  medical diagnoses to your employer due to privacy reasons[1], if the employer has no knowledge at all that you are dealing with medical issues, they cannot be found to have discriminated on the basis of disability in the employment termination.[2]

Employment Terminated While On Short Term Disability (“STD”)

This situation is particularly problematic when STD benefits are paid by the employer rather than an insurer. It is not uncommon for employers to pay STD benefits and use an insurer or Third Party Administrator (“TPA”) to manage the STD claims.

Group disability benefits can be paid in different ways: 

  • Directly by the employer to the employee;
  • By a TPA acting on behalf of the employer under the terms of an administrative services only (“ASO”) agreement;
  • By an insurer under the terms of a group insurance contract.

If you receive cheques/payments from your employer during the STD period or the insurer or TPA communicating with you indicates that they are the “administrator” or are “administering” the claim on behalf of your employer, chances are your STD benefits are being self-funded by your employer.

After your employment is terminated during the STD period, your employer may neglect to advise of your entitlement to long term disability benefits. We have seen many instances where individuals were terminated while on STD and then told that they no longer have coverage when they try to apply for long term disability benefits. They may also struggle to submit  a claim for long term disability as their employers refuse to cooperate once they are terminated.

Frustration Of Contract
An employee receiving disability benefits could also be terminated from their employment on the basis of what is called “frustration of contract”. This occurs when an employee is medically incapacitated to the point that the contract of employment can no longer be fulfilled or performed.

It is up to the employer to prove that there has been a “frustration” of the employment contract. Individuals are frequently terminated prematurely on the basis of “frustration of contract” even though there is insufficient medical evidence to support permanent impairment preventing a return to the workplace.[3]

“Frustration of contract” is a legal concept and all facts and circumstances must be carefully evaluated to determine if the employment termination on this basis was legitimate.

Employment Relationship Status

Termination of your disability benefits claim by an insurance company does not automatically mean the end of your employment relationship with your employer. Your employment relationship could continue even after your disability benefits claim is terminated. 

It is not unusual, however, for employers to terminate employment when disability claims are terminated because they believe, based on what the insurer is telling them, that the employee is “no longer disabled” and they believe that the employee is no longer legitimately off work due to medical reasons. 

Although some employment lawyers may be aware of the delicate interplay between disability and employment, not all are. As disability lawyers, we have seen far too many people at risk of losing disability benefits as they are unaware of their rights and entitlements.

You should speak with a disability lawyer if you:

  • Are receiving disability benefits and your employer is threatening to terminate your employment;
  • Are contemplating a disability claim as you are struggling to do your job and this is affecting your relationship with your employer;
  • Have been  terminated from your employment while receiving disability benefits;
  • Have been terminated from your employment  because you are “no longer deemed disabled by the insurer”;
  • Are being threatened with termination if you do not return to work;
  • Have been terminated from your employment and your inability to perform your job was due to medical reasons; 
  • Have been terminated from your employment before being able to submit a claim for disability benefits;
  • Are having difficulty getting your previous employer to co-operate in the disability claims process;
  • Have been told you have no coverage for disability due to termination of employment; 
  • Are contemplating accepting a severance from your employer and required to sign a Full and Final Release.

If you would like to discuss these issues with an experienced disability lawyer, MK Disability Lawyers LLP would be happy to provide you with a free consultation. Please contact us online or by calling us at 844-697-4600.

The preceding is not intended to be legal advice. This blog is made available for educational purposes only as well as to offer general information and a general understanding of the law, not to provide specific legal advice. By using this blog, you understand that there is no solicitor-client relationship between you and the blog publisher. The blog should not be used as a substitute for competent legal advice from a licensed lawyer in your jurisdiction.

[1] Employers have a duty to accommodate an employee to the point of undue hardship. This could result in requests from an employer for medical information to determine what the employer needs to do in order to accommodate. This does not require full disclosure of all medical information, but enough information to allow the employer to evaluate functional limitations in order to properly accommodate.

[2] Bellehumeur v. Windsor Factory Supply Ltd., 2015 ONCA 473 (CanLII)

[3] Altman v. Steve’s Music, 2011 ONSC 1480 (CanLII)