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Calculating Damages in a Wrongful Dismissal With a Disability Benefit Claim

December 4, 2022

Disability Law

Calculating Damages in a Wrongful Dismissal With a Disability Benefit Claim

Employment Standards

Typically, disability insurance is obtained through an employer's group health benefits, which are provided to an employee as part of their compensation and benefits package. To learn more about Disability Insurance Benefits eligibility, definition of "Totally Disabled", submitting a claim and claim denials, disputing claims and overview of legal process, please read our articles:

  1. Overview of Disability Insurance Benefits and Eligibility
  2. Applying for Long Term Disability and Denied Claims
  3. Disputing Your Denied Disability Claim, Remedies and Overview of Legal Process

An employment law issue may arise if an employer improperly cuts off access to group health benefits for a dismissed employee who becomes disabled during the common law reasonable notice period.

Normally, upon a termination of employment without cause, an employer is required to provide notice of termination or pay in lieu of notice commensurate with the dismissed employee's total compensation for the full duration of the notice period, subject to any enforceable contractual limitations. This includes continued membership in a group health benefits plan. If the employer cuts off access to group health benefits (which is often done because of the terms as between the employer and insurer), it will step into the shoes of the insurer and be required to pay out benefits under the policy if the employee becomes disabled and entitled to LTD benefits during the notice period. Employers should therefore proceed with caution in such circumstances.

Calculating Damages in a Wrongful Dismissal With a Disability Benefit Claim

Upon termination of employment without cause, an employer must provide notice or pay in lieu of notice and continue to make all benefit plan contributions, Employment Standards Act, RSBC 1996 c. 113 ("ESA"). At common law, reasonable notice (damages for wrongful dismissal) is calculated at total annual compensation including pay and benefits. However, a dismissed employee is generally not entitled to 'double recovery' of both reasonable notice and disability benefits (Sylvester v British Columbia, [1997] S.C.J. No. 58).

An employer may also run into trouble if it substantially changes or cancels its group health benefits plan without notice or commensurate compensation and where an employee relies on those benefits. This may give rise to a claim for constructive dismissal, based on an alleged unilateral and fundamental change to the terms of employment that is not accepted by the employee.

Can An Employee on Disability Leave be Fired Due to “Frustration of Contract?”

Frustration of contract refers to an intervening event that makes performance of the contract impossible. In this situation, the parties can deem the contract at an end without obligation or liability to one another.

In some rare circumstances, a prolonged disability without any prognosis of return to work within a reasonable time frame can result in a frustration of contract.

Our experienced Employment & Disability Group is ready to assist you. Get in touch today.

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Chris Drinovz

Chris Drinovz is a Partner at KSW Lawyers and the founder and leader of the Employment & Labour Group. His calling is to excellence through the mastery of his craft and tireless dedication to his clients. He is described as hard-working, analytical, trustworthy, and genuine. Chris works with business leaders and union and non-union organizations to solve workplace legal problems and achieve long-term solutions that align with his client’s values. He is a dedicated advisor and an experienced courtroom advocate with a track record of success.

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Jenson Leung

Jenson Leung and his team assists clients with all labour, employment and long-term disability matters, including wrongful dismissal, human rights, arbitration, insurance and privacy matters.

 

Jenson has extensive experience representing individuals, non-profits and business clients throughout the Lower Mainland. He regularly advises and assists clients in dealing with employment contracts, executive compensation, employee discipline/management, terminations, and long-term disability insurance denials.

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