An employee’s physician says the employee is “disabled”. The insurer’s view is that they are not. The employer sits in the middle, often without timely access to updated medical reports. What are they to do?

Perhaps the best course of conduct may be to do nothing.

Modern Precedent

Consider this scenario in the context of a recent case.

The employee had been well-regarded at his place of employment for some twenty years. He took on a new role which involved managing a team for the first time, and this aspect of the role proved challenging. The employee was given a poor performance review in the new role, and soon thereafter, he was off work on medical disability for a stress leave of six weeks. He never returned to active employment.

The employer provided a plan for short-term disability for 26 weeks, which was duly approved by the insurer. After this time period, the insurer denied further benefits. The policy document states that in this context, where disability benefits are denied, the employee must return to work, failing which he is deemed to have resigned. The employer requested that the employee either appeal the denial or return to work. His lawyer asserted that there was no need to appeal as there was no new medical evidence required.

Here is the classic stand-off. The employee’s physician asserts a disability. The employee refuses to return to work for this reason. The employer, as in this case, ultimately asserted that the employee had abandoned his employment. The employee rebutted this assertion and claimed a medical issue prevented him from working. This resulted in the employee bringing an action against the employer for wrongful dismissal.

Consider the Strategy

One might ask why the company was pressed to make a decision. Ironically, the longer the employee is absent from work, the stronger the case may be later for an argument for frustration. Also, the test for the medical evidence required to support a termination decision is at the time of the termination. Why the rush?

Further, if the employee had intended at some future date to return to work, he would have been required to show medical evidence outlining his need for accommodation, if any. The employer would then have proper medical evidence over the period of absence.

In this case, the employee had made it clear through his legal counsel that he had not abandoned his employment. The policy term was not seen as an enforceable employment rule.

And on the Other Hand

From the employee’s perspective, which was not discussed in this instance, the usual conundrum is whether to sue the disability insurer, which often involves an assertion of a long-term disability claim or an attempt to return to work and assert the contrary, a state of good health, perhaps with some accommodation required. This is also a strategy that requires some thought.

The Result

The employer moved for summary judgment to dismiss the claim based on (1) the policy document which mandated an appeal or return to work and (2) the defence of frustration. Both failed. The first argument failed as it could not be seen as part of the employment agreement and also could not negate the need for fair notice of termination. The second argument had insufficient medical evidence.

Ironically not only did the defence motion fail, but a finding of liability was made against the company in favour of the plaintiff even though he did not present a motion for judgment. This was a bad day in court for the employer.

Take Away for All

This is a complicated area of law. Caution must be taken to act, particularly where the employer may not have access to timely medical reports and instead must rely upon the view of the insurer’s claims representative. Had no action been taken, the passing of time may well have improved the employer’s position and indeed, have allowed the employee perhaps a recourse against the insurer for long-term disability benefits rather than a termination claim.

Get Advice Before You Act

If you have questions about this issue or any employment issue, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins LLP. We regularly advise employees and employers on issues in the workplace. Contact us online or by phone at 416 364 9599 to schedule a consultation.