CASUAL LEGAL: Pay in Lieu of Notice When an Employee has Become Disabled

Attention: AMSC Members – Please distribute to all appropriate personnel

Pay in Lieu of Notice When an Employee has Become Disabled

By James McTague

Reynolds Mirth Richards Farmer LLP

AMSC Casual Legal Service Provider

When an employee’s employment is terminated without cause, the employer is required to give the employee reasonable notice of the termination or provide payment in lieu of notice.  A recent Court of Queen’s Bench decision dealt with the wrongful dismissal of an employee who became disabled and unable to work during the notice period. 

The employer provided a 63 year old employee with a working notice period of 12 months’ and no payment in lieu.  During the 12 month period, the employee became ill and was no longer able to work.  When the employee was no longer able to work, he began receiving disability benefits.  He was later deemed totally disabled by the disability insurer and would continue to receive disability benefits until he reached the age of 65.

When the factors to determine the appropriate reasonable notice were considered, the parties agreed that the notice period should have been 24 months.  The dispute pertained to whether the employee should be entitled to severance payments for the full 24 month period, since he was unable to mitigate due to the illness or whether he should not be entitled to severance, as he was unable to work during the period.

The Court held in a wrongful dismissal matter, “an employee is to be put in the same position as if reasonable notice had been given, and there should not be double compensation.”  A terminated employee should not be put into a financial position that is better than if their employment had not been terminated.

Since the employee was unable to work after the illness, the employee is in the same position, although unfortunate, whether he was terminated or not.  The Court held there were no damages arising from the termination, even though the notice period provided at the outset was insufficient.

One must consider that the circumstances of this case were very fact specific and other similar situations may result in different outcomes.  The primary takeaway from this decision is that when an employee becomes disabled during the reasonable notice period, such circumstances could be a factor when a Court is making a determination as to what severance the employee is entitled to pursuant to the termination. 

To access AMSC’s Casual Legal Helpline, AUMA members can call toll-free to 1-800-661-7673 or email casuallegal [at] amsc.ca (casuallegal[at]amsc[dot]ca) and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP.  For more information on the Casual Legal Service, please contact Will Burtenshaw, Senior Director, Risk & Claims, at 780-431-4525, or toll-free at 310-AUMA (2862) or via email at wburtenshaw [at] auma.ca (wburtenshaw[at]auma[dot]ca).  Any Regular or Associate member of the AUMA can access the Casual Legal Service. 

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.