HR Compliance: LONG-TERM DISABILITY Absences

When an employee goes on long-term disability (LTD) leave for a long period, it puts your company in a tough position, especially if the employee holds a key job. The law requires you to hold the position open long enough to give the employee an opportunity to return to work. But you don’t have to wait forever. When it becomes clear that there are no reasonable prospects of the employee returning to work, the employer can terminate. But how do you know when you reach that point? How long is long enough? Unfortunately, the law doesn’t furnish an answer. In recent years, employers have hit upon what looks like a workable solution. Instead of letting the return to work process drag on indefinitely, they establish fixed time limits for absences before employees lose their jobs (or their seniority). These fixed time limits are often generous; and, in unionized workplaces, they may be agreed to in labour negotiations and made part of the collective agreement. But be warned: Fixed time limits could get you into a mess of legal trouble. This article will explain why. And it will show you how to determine how long you do have to wait for an employee on LTD to return to work. There’s also a Model Clause that you can adapt to establish fixed limits on absences without incurring liability. WHAT THE LAW REQUIRES Employers may terminate employees who have been absent for extended periods and have no reasonable expectation of coming back to work, notes Montreal employment lawyer Julie Cuddihy. This is true even if the absence is unpaid, non-culpable and the employee has an excuse. The theory: The absence defeats or frustrates the employment contract and makes it impossible for the employee to do the job. But there are laws that employers must consider. For example, human rights laws ban employers from discriminating by disability. More often than not, the mental or physical condition that forces an employee to go on LTD leave is considered a disability under human rights laws. Part of an employer’s duty to refrain from discrimination is to make accommodations necessary to afford disabled employees the same opportunities as other persons. Accommodation often involves letting employees return to work in the same or similar position even if their absence drags on for an extended period. But employers aren’t required to make accommodations that constitute an undue hardship. When waiting for an employee on LTD to return to work becomes an undue hardship, you know your duty to accommodate has come to an end and you can terminate the employee. The problem, of course, is figuring out just how long it takes for an employee’s absence to reach that point. Pre-Determined Limits & Accommodation Thus, establishing time limits on how long an employee can be absent before his job is no longer protected seems to be a fair solution, as long as the limits are reasonable. But automatically terminating employees because they’ve been on LTD leave and still have no reasonable chance to return to work beyond a pre-determined time is a violation of the employer’s duty to accommodate a disabled employee. Why? Courts and official guidelines issued by regulatory agencies such as the Canadian Human Rights Commission have made it clear that the accommodation process must be based on the particular needs of the individual employee. Blanket policies that treat all employees the same regardless of their characteristics or circumstances aren’t acceptable. According to a leading Supreme Court case, each person must be “assessed according to his or her own personal abilities, instead of being judged on presumed group characteristics.” A workplace rule that “unnecessarily fails to reflect the differences among individuals runs afoul of the [duty to accommodate] and must be replaced” [British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), (Note: This case is called the Grismer case)]. The problem with fixed limits on absences is that they apply equally to all employees without accounting for individual needs and circumstances. Consequently, an employer who bases a termination decision on even generous time limits that are fixed in advance fails to meet the standards in Grismer. APPLYING THE LAW But employers may still have room to maneuver. As HR director, you need to understand how the rules apply in different situations so you can make legally sound decisions when dealing with your own employees on LTD. Scenario 1: Employer Imposes Fixed Limits Unilaterally Employers may try to establish fixed limits on absences unilaterally, especially if a workplace isn’t unionized. But unilaterally imposed limits are problematic under Grismer because they’re a blanket policy. Example: An Ontario paint brush manufacturer adopted a policy to hold positions open for absent employees for a maximum of one year. In March 2000, an employee who “floated” between job assignments was hurt in a car accident and had to go on disability leave. On Aug. 30, 2001, after being out almost 18 months, she was still suffering from chronic pain and her prospects of returning to work hadn’t improved. So the company terminated her. The floater filed a disability discrimination complaint. The ON Labour Relations Board ruled that the company was liable. Policies that limit the time for which an employer will hold a position open to a predetermined period have “almost universally been found to violate” the employer’s duty to accommodate under human rights laws, the Board explained. So it awarded the floater damages for wrongful dismissal [Nour Trading House Inc. v. Lam]. Scenario 2: Fixed Limits Negotiated with Union Many collective agreements include automatic termination clauses stating how long absences can last before employees lose their jobs (and/or their seniority). Are such clauses enforceable? On the one hand, the union’s primary function is to negotiate agreements on behalf of its members. Not allowing a union to agree to fixed time limits on absences would interfere with its prerogative and impair collective bargaining. At the same time, letting unions and employers negotiate maximum limits on absences contradicts the Grismer rule that accommodations must be based on the needs and circumstances of the individual and can’t be one-size-fits-all. This is precisely the dilemma the Supreme Court of Canada had to wrestle with in a case it decided in January 2007. A medical secretary at a Québec hospital suffered a nervous breakdown and had to take a leave of absence. The collective agreement between the hospital and the union provided for maximum absences of 36 months. For about two and a half years, the secretary underwent rehab and made a couple of unsuccessful attempts to return to work. Then, two months before her scheduled return, she got into a car accident and was back at square one. When the absence reached month 36 and the secretary was still unfit for work, the hospital sent her a termination letter. The union filed a grievance claiming discrimination. Three years, one arbitration and two appeals later, the case landed in the Supreme Court. The Court’s ultimate ruling was that the three-year time limit in the collective agreement wasn’t automatically binding. There are three things you need to know about the ruling: 1. Employers & Unions Can Negotiate Limits: The Court acknowledged that collective agreements often contain clauses that set fixed limits on absences and that “such clauses are clearly aimed at ill or disabled persons.” However, the Court continued, parties to a collective agreement may negotiate clauses to ensure that sick employees return to work within a reasonable time. Such clauses can include the “maximum period of time for absences.” Caveat: The limit is valid only if the employer can show that this is the point at which the absence imposes undue hardship. 2. Employer Can’t Automatically Apply Negotiated Limit to All Employees: But what about Grismer? The Court said that accommodation and deciding how long an absence can last is and must remain an “individualized process.” The employee’s right to accommodation under human rights law, the Court explained, is a “fundamental right” that a union can’t trade away in collective bargaining. In other words, the employer and the union have no authority to establish a definitive maximum length of absence that automatically applies to all employees on LTD. The operative word is “automatically.” The negotiated limit may apply to some employees and not to others—depending on the employee’s individual circumstances. Thus, at the end of the day, employers still must assess each employee’s needs and determine if the negotiated maximum is the actual point of undue hardship for that employee. In other words, the employer must compare the negotiated maximum with the time the employee would have been entitled to receive under human rights laws if the maximum hadn’t been in effect:

1. If the maximum absence is more generous than the latter, it’s valid; and
2. If the maximum absence is less generous, it’s invalid.

3. Negotiated Limit Helps Determine How Long Is Long Enough: Fixed limits on absences don’t automatically bind all employees covered by the collective agreement. But they’re still important in determining how long an absence can last before undue hardship sets in. According to the Court, “the fact that such a period has been negotiated and included in the collective agreement indicates that the employer and union considered the characteristics of the enterprise and agreed that, beyond this period, the employer would be entitled to terminate the sick person’s employment.” Moreover, this “consensus” between the union and employer is important because it “was reached by the people who are most familiar with the particular circumstances of the enterprise [and who] represented the different interests of the workplace” [McGill University Health Centre v. Syndicat des employés de l’Hôpital general de Montréal]. Applying the Rules: Some Do’s & Don’ts So what does this mean to you? ✓ Do Negotiate Fixed Limits on Absences If you haven’t already done so, negotiate to include fixed limits on absences due to disability. Make the maximum absence as generous as possible. Establishing your willingness to tolerate long absences should win you points under McGill because it demonstrates your patience and willingness to make accommodations. And if absences last beyond the prescribed maximum, judges and arbitrators may conclude that you incurred undue hardship and could terminate. ✓ Do Adopt a Written Policy Put the fixed limit in writing and make it part of the collective agreement or individual employment contract. Although there’s no such thing as a one-size-fits-all formula, you can adapt the Model Clause on this page to your particular circumstances. ✘ Don’t Treat the Limit as an Absolute Deadline Don’t treat the fixed limit as a hard and fast rule. Remember Grismer: You can’t accommodate by applying a blanket rule to all employees. You must consider the employee’s individual circumstances and needs, including:

1. The nature of the disability, including whether the condition is temporary or permanent;
2. The employee’s prognosis and prospects for returning to work;
3. How long the employee has already been on leave—and how much longer she’s expected to be out; and
4. The employee’s position—for example, you may have to hold a receptionist’s position open longer than, say, the head of your research team.

So automatically firing an employee for being absent longer than the fixed limit can lead to liability for disability discrimination. However, what you can do is treat the fixed limit as a trigger for evaluation and a decision about the status of the employee’s situation. That’s the approach of this Model Clause. Conclusion To help your company make decisions about how to handle employees on unpaid LTD leave, you must understand how long an absence can last before it warrants termination. Although you must accommodate each employee individually, the need for individualized accommodation doesn’t preclude the adoption of fixed limits on absences. But if an employee reaches the limit, the next step isn’t automatic termination but evaluation. If after a fair and thorough evaluation you determine that the employee has no reasonable prospects of returning to work, you’re within your rights in ending the employment. SHOW YOUR LAWYER

• British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868, Dec 16, 1999
• Nour Trading House Inc. v. Lam, [2006] CanLII 41447 (ON L.R.B.), Dec. 8, 2006
• McGill University Health Centre v. Syndicat des employés de l’Hôpital general de Montréal, [2007] 1 S.C.R. 161, Jan. 26, 2007.