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When Teresa Hollingsworth, co-ordinator of community and corporate services at the Upper Thames River Conservation Authority in London, Ont., learned that a colleague had been diagnosed with cancer, she and her co-workers found numerous ways to show their support.

"We were very involved in her illness," she said, "never thinking that she wouldn't make it." They placed a box in the cafeteria where employees could leave notes, cards or small gifts to send to their colleague's hospital room once a week. They helped share her workload, and videotaped events she could not attend for her to watch later.

Already an organization that prided itself on its inclusive culture, it was a small step for staff to rally around someone dealing with a troubling illness that would eventually take her life.

"I know it sounds goofy," said Ms. Hollingsworth, "but it's a community. You look after each other in your community."

This reaction to illness in the workplace was the polar opposite of what happened to Elsa Torrejon, a fomer leasing agent with Weston Property Management in Toronto. When she told her employers that she had been diagnosed with breast cancer and would have to take some time off, she was fired. The provincial Human Rights Tribunal found Weston Property guilty of discrimination and wrongful termination, awarding Ms. Torrejon $22,000 for damages and lost wages.

Dealing with employees who face severe medical issues or other personal problems is a challenge for any company. For smaller businesses especially – ones that often can't afford to offer long-term disability leave – doing the right thing may be even harder to figure out.

"Companies are often very fearful of addressing the situation of a person who is going through a difficult time," said Sally Maitlis, associate professor at the University of British Columbia's Sauder School of Business. "It becomes the elephant in the room. People tend to stay clear of them, and talk about them instead of talking to them."

Sick and disabled workers are protected under Canada's human rights legislation, which requires employers to accommodate them "up to the point of undue hardship." This refers to an employer's capacity to accommodate without an unreasonable amount of difficulty, and is always determined on a case-by-case basis.

For Dr. Maitlis, however, who is a member of a North America-wide network of business professors called the Compassion Lab, fostering empathy in the workplace can offer a better guideline to dealing with an ill employee. And employees "don't have to be suffering to benefit from caring and empathy in an organization," she said.

Just having a manager or employer show concern – not about a sick employee's performance, but about him or her as a person – can make a big difference, she said.

Studies have also shown that small, supportive gestures – a gift card to help out with extra expenses, flexible hours, working from home or sharing the workload with others – matter most, she said.

"And these gestures are not at odds with being a productive and efficient organization," she added. "They're actually incredibly consistent with that. You're trying to step in now so that they can recover more quickly and get back to full capacity."

The ill employee's relationship with co-workers is another aspect requiring sensitivity. While open communication is essential to a nurturing company culture, when it comes to informing others about someone's personal situation, said Dr. Maitlis, "it has to be the individual's choice. But the manager or employer could talk to them about whether they want to share and explain how this could be helpful."

"I think it all stems from that person's permission and how comfortable they are," agreed Ms. Hollingsworth. Managers at her workplace have dealt with the matter in varied ways, ranging from sending an e-mail to all staff or only discussing it with the worker's team to "keeping a lid on it completely," she said.

For John Allen, president of G&A Partners, a human resources outsourcing firm in Houston, Tex., the more dialogue the better. "You also see the true colours of the members of the team," he said. "If everybody rallies around the cause, you know you've got a great team. If some people moan and groan, you know that there are dynamics that need to be addressed."

Setting up a system of paid time off rather than annual sick days allows unused days to be carried over from one year to another, when they might be needed, said Mr. Allen. He also recommends that businesses should look into long-term disability insurance for employees as soon as the company can afford it.

"An employer has legal as well as potentially moral duties they have to abide by," said Mark Swartz, a Toronto-based career consultant. "It makes so much sense to be sensitive to the ill employee's needs, because if not, imagine the impression it will make on all the other employees, how it could decrease morale [and] cause anxiety that they will be treated like disposable commodities if they get sick – not to mention things like social media. A company's reputation today can be besmirched in an instant."

Conversely, when employees see a sick co-worker being treated compassionately, they can become highly motivated. "They experience increased positive emotions about where they work, and how they feel about their organization," said Dr. Maitlis.

Companies are increasingly including compassion as a core value in their corporate culture, she said, with an upcoming issue of the Academy of Management Review dedicated entirely to it.

"It's not just a sideline," she said, "that 'if we can afford it, we'll be nice to people.' We are beginning to see how central it is to good organizational functioning, and if you behave like this, you will have thriving and flourishing employees."