Termination Without Cause While on Short-Term Disability: Does it Warrant Aggravated Damages?

Martin v. Yellow Pages Digital & Media Solutions Limited, 2018 BCSC 2557

The employee brought a summary trial application for wrongful dismissal. There was no question that the employee was terminated without cause. The parties disagreed on the length of reasonable notice, the quantum of reasonable notice, and whether or not aggravated damages were warranted. Despite the employee being terminated while on short-term disability, the court determined that the employee was not entitled to aggravated damages and dismissed this claim.

Facts

The employee started working for the employer as a human resources consultant on July 4, 2011. She was given notice of termination of her employment on February 27, 2018, at which time she was on short-term disability leave. She was scheduled to return to work on a graduated return to work schedule that would start on March 4, 2018 and see her resume full time employment on March 25, 2018. Although the employee’s position was eliminated as of February 27, 2018, the employee stayed on short-term disability with the employer topping up her pay until March 25, 2018, which the court found to be the date of termination. 

Issue 1: Length of reasonable notice

The employee’s length of employment was almost 7 years. The position of the employee was that she was entitled to 12 months of reasonable notice. The position of the employer was that the employee was entitled to reasonable notice equal to the amount of time it took the employee to find a similar job, which the employee did in 5 months. The court determined that the employee was not in any management position, and upon applying the Bardal factors, found that reasonable notice owed to the employee should have been 7 months from March 25, 2018, which would take her to October 25, 2018. This would be offset by what the employee earned after she started her new job in August 2018.

Issue 2: Quantum of Damages for failure to provide Reasonable Notice

The main issue in this regard was the employee’s entitlement to a bonus. The employee’s terms of employment stated that in order to be eligible for a bonus, the employee had to be actively employed by the company at the time of the payout, which was customarily in February of each year.  The court did not find any contractual basis for including an amount for a bonus on a pro rata basis over the months of her notice period. The employee was found not to be entitled to a bonus, or any portion of a bonus.

Issue 3: Aggravated Damages

The employee struggled with anxiety and depression. While working for the employer, the employee had previously taken a disability leave for the same reasons from September 2016 through to January 2017. The employee at the time of termination was on a disability leave that started on September 14, 2017, and was to end on March 25, 2018. The employee’s position was that she was already in a vulnerable state, which the employer was well aware of, and that the termination caused her condition to worsen, which justified aggravated damages. The court affirmed that a dismissed employee is not entitled to compensation for injuries flowing from the fact of the dismissal itself. An award of aggravated damages are only available when it is found that an employer engaged in conduct that was unfair or in bad faith, and that the manner of dismissal causes the employee mental distress.

The court found that the manner of dismissal was not done unfairly or in bad faith, rather it was part of a mass termination. There was no evidence that the employer timed the employee’s termination to deliberately coincide with the employee’s recovery and attempt to return to work. The evidence led the court to find that the timing of the termination was purely related to business interests, not the employee’s personal circumstances. It is interesting to note that the court discussed that it may have amounted to bad faith for the employer to bring the employee back from disability knowing that the position had been eliminated.

Implication for employers

Employers should always be cautious when terminating an employee while the employee is on a disability leave, regardless of the reason for the disability. The primary concern is that doing so may expose the employer to potential employment standards or human rights complaints. Doing so can also potentially expose the employer to damages relating to the loss of the disability insurance. This case; however, demonstrates that in the right circumstances an employee can be terminated while on a disability leave without exposing the employer to damages over and above reasonable notice. To protect against enhanced damages employers should be able to demonstrate that the dismissal is for purely business reasons as was the case in this case, and that the termination itself is carried out in a respectful manner.

A link to this case can be found here.

Have questions regarding terminations? This post was authored by Ryan Chan. Please don’t hesitate to contact him at rchan@harpergrey.com or anyone else listed on the authors page.