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Matt Lalande is the founder of Lalande & Company Injury and Disability Lawyers, Hamilton

The question of whether an employee can be terminated while on disability is a common concern, especially if there’s a chance the claimant’s impairment or illness may not be permanent but likely to persist into the indefinite future. Unfortunately, the answer can be complicated and sometimes difficult to understand for both disability claimants and employers.

For a claimant, in order to qualify for long-term disability benefits, you have the onus of proving that you are totally disabled as per your policy definition. Typically, most Canadian disability policies provide that you will be considered totally disabled within the first two years of disability if you’re incapable of performing the substantial duties of your own regular job. This is typically called the “own occupation” definition.

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After two years, most disability policies typically change their definition of total disability from “own occupation” to “any occupation,” meaning that you must be prevented by your illness or impairment from engaging in any occupation for compensation for which you are reasonably qualified by education, training or experience. By this point, there is no doubt that your long-term disability (LTD) insurer will require you to apply for Canada Pension Plan disability benefits, as most policies mandate. If you have made enough contributions into CPP, a monthly income benefit is available to you through the federal government if you suffer a disability that is severe and prolonged and that prevents you from being able to work at any job on a regular basis. If you are approved for CPP disability, your LTD carrier will receive that payment, since you cannot receive both.

Legally, the answer comes down to logic and fairness

If you are sick or disabled, you probably have legitimate concerns about what’s going to happen to your position. No one wants to lose their job if there is a possibility of returning to work. Even if there is no remote possibility of getting back to work, long-term employees still have difficulty accepting the thought of being replaced or not being needed.

Similarly, when an employee is absent from work and collecting disability for an extended period, employers have continuing valid concerns as well. They are questioning their obligations, how long they need to keep your position open, dealing with temporary replacements and, if they do decide to terminate your job, are they opening themselves up to risk?

From a legal perspective, the answer to the question comes down to logic and fairness. The employee wants protection. The employer wants to minimize exposure – i.e. cost and financial risk. The starting point of the analysis is your clinical picture. Before approaching any discussion concerning termination, employers need to have an idea of what’s wrong with you. They need to obtain some degree of medical predictability or prognosis.

Since you’ve been dealing with your disability carrier, your employer is likely unaware of the extent or particulars of your condition. Despite this, the onus is in fact on your employer, and not you, to make efforts to seek medical evidence from you to determine the likelihood of whether your incapacity or chronic disability will impede the performance of your employment obligations in the future.

Is a return to work unlikely?

The ultimate question that should be asked of you is whether your disability appears such that a return to work is highly unlikely. If it’s determined that there is no reasonable likelihood of you being able to return to work within a reasonable period of time, then your employer can in fact terminate your position. The termination is not based on the theory of being terminated for cause. Rather, our common-law courts have interpreted this type of termination as a “frustration” of your employment contract, meaning that your employment contract was put to an end because of uncontrollable and unforeseen circumstances – your permanent sickness or injury.

The question then often becomes whether you can claim damages for wrongful dismissal – which wholly depends on the facts of each individual situation – at the time of termination, not after. If your employer failed to take all considerations into account prior to termination, such as the terms of your contract or the nature and prospect of your recovery prior to termination, then there may be a claim for damages. At minimum, severance and termination pay are owed, which is calculated based on your active years of service up until the date of termination.

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What is to be remembered is that a permanent disability on your part that prevents you from fulfilling the functions required by the job will result in a frustration of your contract of employment. Determining frustration is far from easy for employers – but circling back to logic and fairness, many times the termination comes hand-in-hand with the change of definition of total disability at the two-year mark. If you are claiming LTD benefits because you are totally disabled from “any occupation” from which you are reasonably suited by education, training and experience, then perhaps it’s best to part ways and move on.

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