With the many recent significant changes to the workers compensation system, understanding an employer’s obligations under the BC Workers Compensation Act (“WCA”) has never been more important. Bill 41- 2022: Workers Compensation Amendment Act (No. 2), 2022 (“Bill 41”) received Royal Assent on November 24, 2022, and contains further amendments to the WCA that increase employers' obligations to injured workers and have significant impact on both employers and employees. Some of these amendments are coming into effect in the spring of 2023 (see Schedule at the end of this article).

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In our previous article Bill 41 (2022): Significant Changes to the BC Workers Compensation Act, we cover the changes in detail, offer some background on these amendments, as well as their schedule. In this article, we will answer the top questions we received from employers regarding the amendments and BC Workers Compensation Act, and share with you our webinar recording and presentation slides.

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Webinar Materials: Amendments to the Workers Compensation Act Presentation

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On December 13, 2022, Chris Drinovz and Alejandra (Ale) Henao presented a webinar for the Manufacturing Safety Alliance of BC on these changes.

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Access the Presentation PowerPoint Slides here.

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Our full presentation recording is available below.

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EMPLOYER Q&A

Question: When will the indexing benefits go into effect?

This has already come into effect. The WorkSafeBC Cost of Living allowance will be indexed based on the full Consumer Price Index is effective November 24, 2022.

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Question: Is this significantly different from the model created (and now discontinued) for COR Return to Work (less the auditing part)?

I think the COR Return to Work model was more extensive and comprehensive than the two new statutory duties (duty to cooperate and duty to maintain employment) as it concerned the development and maintenance of a complete return to work program. However, the COR model did not contain the duty to accommodate nor was there any risk of being fined for noncompliance.

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Question: Regarding duty to maintain employment, what if the employee is terminated, for cause, while on WSBC claim? Does this prevent the employer from taking a labour relations action?

This is a great question. The six month timeline where you cannot terminate only begins to run after the employee returns to work, so if the employee is terminated for cause while still on claim and prior to returning, there is an argument that the section is not triggered. However, it may be interpreted that you must maintain employment during the period of time the worker is off as well. Also, there may be other exposures including a prohibited action claim or human rights claim.  If you are planning to terminate for cause, you need to be sure that the decision is not tainted in any way by prohibited grounds or the fact that the worker raised health and safety issues.

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Question: Do these administrative fines re duty to accommodate apply to Federally regulated employers?

At this time, it appears so. The penalty section falls within the compensation section (rather than the OHS section) and so it likely applies to federally regulated employers. The legislation allows for certain industries to be exempted by regulation, but we do not have any details yet.

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Question: What if an employee doesn’t complete rehab, leaves the country (without letting employer or Worksafe know) and was expected back at work on December 1st but doesn’t have a return flight scheduled? Can that be considered quitting?

WorkSafeBC has the discretion to discontinue paying a worker when they disengage in return-to-work efforts/Vocational Rehabilitation for non-compensable reasons.  Accordingly, WorkSafeBC can discontinue paying a worker when they leave the country.  Work abandonment is engaged when there is clear and unequivocal intention from an employee to not return to work.  Employers are recommended to inquire about the worker’s personal or medical leave status before claim job abandonment.

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Section 154.2 Duty to Cooperate imposes a reciprocal duty to cooperate between the worker and the employer.  Employers can contact the Board to advise that an employee is failing to cooperate by not engaging in suitable work.  The Board has 60 days to decide whether the worker failed to cooperate from the date the complaint is made (Section 154 (5)).  If the Board agrees with the employer, the Board has jurisdiction to reduce or suspend the worker’s payment until the worker cooperates (Section 154 (6)).

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Question: The 6-month rule, is that a combination of time, or a 6-month run? And are these 6 months after the injury or after the worker returns to work?

Great question. The language of s. 154.3(8) says “within 6 months after the worker begins to carry out suitable work or begins to carry out the essential duties…” so I would say it begins to run after the worker returns to work and the period of time runs for 6 months consecutively rather than a combination.

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Question: Are there special implications for young workers? It's my understanding that those now coming into a manufacturing setting must be 18 years old.

Bill 41 does not deal with young workers. The Occupational Health and Safety Regulation defines a young worker as any worker under age 25. Section 3.23 Young or New Worker Orientation and Training outlines the young worker’s rights and employer’s responsibilities, including health and safety specific orientation and training for all fields: OHS Part 03 Rights and Responsibilities s 3.23.

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Question: Would it be considered suppression of claims if it takes a significant amount of time for a worker to see a doctor, and the employer pays normal wages for that time?

As long as there is no intent to dissuade the worker from making a compensation claim, I don’t see that as claim suppression. If the injury was work related there is of course the obligation for the employer to report the injury to WorkSafeBC.

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Question: Will the provisions of "reasonable expectation" as found in RSCM Vol 2, Policy Item 74.00  Reduction or Suspension of Compensation remain in effect?

Which basically requires WSBC to ask the worker why they are not co-operating prior to rendering a decision – so usually leads to delay in decision making?

Policy Item 74.00 Reduction or Suspension of Compensation remain in effect.  If a worker fails to attend an examination or obstructs the medical examiner the worker’s right to compensation can be suspended until the examination takes place.  The Board can also reduce or suspend compensation if the worker engages in unsanitary or injurious practices that delay recovery.  Or when a worker refuses to engage in treatment reasonably essential to promote recovery.

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Question: Is there any way to clarify the reporting process of a suspected injury to employers? Right now, there is no real suitable time period. (No report from employee for months after a possible injury)

Section 149(2) of the Workers Compensation Act obligates the worker to report a workplace injury to the employer “as soon as practicable after the occurrence”. While there is no actual timeline given, this would generally mean immediately, within a few days or weeks. The employer in turn has an obligation to report the injury to the Board within 3 days of being informed.

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Question: If an employee is in an accommodated position, that is not working out due to their ability, are we required to accommodate into a different position?

Interesting question. To be safe I would say that the duty to accommodate lasts for at least six months after the worker returns to work. So if it is not working out in one position, there would be an obligation to offer another position, assuming that alternative suitable work is available within the employee’s skills set and your operations.

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Question: In a social services workplace, where say someone has a limitation on working with a client with aggression... how would one handle that RTW piece if we cannot guarantee that no aggression would come up in any role, they would be suitable for?

In that situation you would have to carefully consider if you could modify the position to accommodate the worker. For example, can you screen the clients or put some protective measures in place to ensure that the worker doesn’t have to deal with an aggressive client? Can you modify the position so that the worker does not deal directly with clients? If those options are not possible without creating an undue hardship, then you may tell WorkSafeBC that there is no suitable work available given the nature of the limitations.

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Question: Is there any documentation yet written for seasonal worker cases? 6-months for a 3-month annual work-season could have 2 possible interpretations (at least).

The duty to maintain employment will apply to full-time and part-time employees who have been employed for a continuous period of 12 months pre-injury. This raises the interesting question of whether a seasonal worker who only works 3 months of the year is continuously employed or not. If the worker is formally laid off at the end of each season and works elsewhere, it could be argued that their employment is not continuous and starts anew each season. If that is the case, then the duty would not apply to this worker, as they would not meet the continuous 12 months.

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Question: If a worker injures themselves at home and the employer is concerned that the worker may intensify that injury if they return to work too early, is the employer justified in discouraging an early return?

Any return to work will have to be in conjunction with the recommendations of the worker’s medical team and WorkSafeBC’s assessment. If the evidence indicates that the worker is at risk for reinjury by returning early, then the employer would be justified in discouraging an early return. However, if there is no evidence for the employer’s position (i.e. the workers doctor and/or WorkSafeBC say that the worker is cleared to work) then taking this position could be problematic and lead to a non-compliance.

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Question: How does one handle a situation where suitable Modified Duties are extended to an injured worker, but they choose to ignore them and stay at home?

If WorkSafeBC finds that the modified job offer is suitable and reasonably available to the injured worker, failure to accept the job may result in an end to their Vocational Rehabilitation benefits.  Now, there will also a reciprocal duty to cooperate between the worker and the employer (Section 154.2 Duty to Cooperate). Employers can contact the Board to advise that an employee is failing to cooperate. The Board has 60 days to decide whether the worker failed to cooperate from the date the complaint is made (Section 154 (5)).  If the Board agrees with the employer, the Board has the power to reduce or suspend the worker’s payment until the worker cooperates (Section 154 (6)).

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Schedule

Please see the "Commencement" table at the end of the Bill for information as to when the various parts of the legislation will take effect – details below:

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

With the many recent significant changes to the workers compensation system, understanding an employer’s obligations under the BC Workers Compensation Act (“WCA”) has never been more important. Bill 41- 2022: Workers Compensation Amendment Act (No. 2), 2022 (“Bill 41”) received Royal Assent on November 24, 2022, and contains further amendments to the WCA that increase employers' obligations to injured workers and have significant impact on both employers and employees.

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Once you've reviewed this article, we recommend visiting our follow up resources below:

• Employer FAQs: Bill 41 Changes to the Workers Compensation Act - from our presentation for the Manufacturing Safety Alliance of BC
• Bill 41 - Amendments to the Workers Compensation Act - Surrey Board of Trade Presentation - view/share the recording or review our presentation slides
• WorkSafeBC's presentation slides from October 21, 2023 presentation, covering the New Duty to Cooperate and Duty to Accommodate
• WorkSafeBC's Discussion Paper and Guidance on Return to Work Obligations: Duty to Cooperate and Duty to Maintain Employment

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Background on WCA Amendments

By way of background, since 2018, the BC Ministry of Labour has commissioned 5 lengthy and comprehensive reports reviewing various aspects of the compensation system. The reports can be found here. In summer of 2020, the Government started implementing some of these recommendations through amendments to the Workers Compensation Act. The amendments included increased worker benefits, Covid-19 related amendments, as well as new tools added for criminal prosecutions for serious health and safety violations.

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Most of the amendments introduced with Bill 41 originate from the Workers Compensation System Review by Janet Patterson, report released in October, 2019. The Report is a mega-report which totals no less than 517 pages, and contains 102 Recommendations. It expanded on the “worker centered approach” that was mandated in the Petrie Report. Ms. Patterson is a former labour lawyer with a strong connection to the BC Federation of Labour.

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In our view, the most significant aspect of Bill 41 is the introduction of two new statutory duties – the Duty to Cooperate and the Duty to Maintain Employment.

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These duties will require both employers and workers to become much more active participants in claims.

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Importantly, both duties are triggered when a worker:

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1. suffers an injury that arose out of and in the course of employment; and  
2. is disabled from earning full wages as a result.

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There needs to be an accepted WorkSafeBC claim and the worker has to be disabled from their pre-injury job in some way for these duties to be triggered.  

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Another important point is that these duties apply to union and non-union settings. Section 154.4 of the Act says that if there is a conflict between these duties and the collective agreement, the WCB duties will take precedence if they are more generous to the worker.

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Important note: at this time, these sections are not in force yet - they are going to come into force by regulation at some time in the future, so they do not yet apply to any current WorkSafeBC claims (as of December, 2022).  

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More details about these duties below.

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Duty to Cooperate

Section 154.2 creates a duty for both employer and worker to co-operate and work together with each other and with the Workers’ Compensation Board (the "Board") to facilitate the injured worker’s return to suitable work as soon as possible.  

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The reciprocal duty to cooperate between the employer and the worker includes the following components:

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1. Contacting each other as soon as practicable after the injury and maintaining communication;
2. Identifying suitable work for the worker that, if possible, restores the full wages the worker was earning pre-injury; and
3. Providing the Board with information the Board requires in relation to the worker’s return to, or continuation of work.

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The first component is essentially a duty to communicate, and it is reciprocal, so the injured worker also has an obligation to contact and communicate with the employer about coming back to work.  The section says if they don’t, then their benefits can be reduced or suspended until they do. The duty to communicate does not apply if, having regard to all of the circumstances, contact and communication between the employer and the worker are likely to imperil or delay the worker's recovery.

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The second and third components introduce a formal obligation to identify suitable work with the goal of restoring the workers full earnings. This duty is just about providing the information, and only deals with identifying the work and giving the Board this information and whatever information the Board might require.  It does not deal with actually offering that work to the employee, that comes in the next section.

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Dispute Resolution

If either the employer or the worker believes the other is not cooperating in the process, they can lodge a complaint to the Board, and the Board has to make a determination about the complaint within 60 days.  

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If the employer is offside, they can be hit with a fine, if the worker is offside their benefits can be suspended.

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Duty to Maintain Employment - Accommodating and Returning Injured Workers to Work

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Most notably, the Bill 41 amendments establish a new legal duty requiring employers to maintain employment of injured workers and make any necessary changes to the work or workplace to accommodate their successful return to work, up to the point of undue hardship (section 154.3).

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Exceptions: This duty applies only to employers with 20 or more workers, and in respect of workers who have been employed by the employer for at least 12 continuous months, and who have been unable to work as a result of a work-related accident.

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This duty comes into play when the injured worker has been cleared to return to work by WorkSafeBC and there are two situations:

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1. A worker is “fit to work”, but cannot carry out the essential duties of their pre-injury work, the employer must offer the worker the “first suitable work that becomes available.”
2. A worker is fit to carry out the essential duties of their pre-injury work, the employer must either (a) offer the same pre-injury work to the worker, or (b) offer the worker alternative work “of a kind and at wages that are comparable to the worker’s pre-injury work and wages from that work.”

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What is “suitable work”? – that is not defined, so we think it will become the subject of much dispute. Do you have to offer work that that worker is not trained or qualified for? Probably not, because that is not suitable.  Do you have to create work that you don’t actually have?

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This new duty to accommodate is separate from any obligations under BC’s Employment Standards Act, any employment or collective agreements, or the existing accommodation duty under the Human Rights Code, meaning employees will have the option of filing a claim with the Board or a complaint with the Human Rights Tribunal (or both) in connection with termination and accommodation issues relating to the same work-related illness or injury.

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Limit to the Duty to Maintain Employment

An employer must make any change to the work or the workplace that is necessary to accommodate a worker, up to the point of undue hardship. Whether or not accommodating an injured worker amounts to undue hardship is a complex issue and requires a detailed analysis of the specific circumstances, including physical requirements, evidence of financial impact on the business and operations, etc.

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These duties expire 2 years after the date of injury if the worker has not returned to work or if the worker is carrying out suitable work - this coincides with the concept of “frustration of employment.”

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Employer’s Failure to Comply & Penalties – Six Month Rule

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The amendments also include a built-in mechanism to ensure that employers comply with the duty to return injured workers to employment. If an employer terminates a worker within six months of their return to work, the employer will be deemed to have failed to comply with its legal duty to return the injured worker to work unless the employer can prove that the termination was unrelated to the worker’s injury.

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If the employer is found to have breached the duty to re-employ, the Board may compensate the worker by paying them an amount equivalent to the compensation that the worker was entitled to pursuant to the temporary total or partial disability provisions of the WCA. In addition, the Board can impose an administrative penalty on the employer in an amount not exceeding the Board’s maximum wage rate for the applicable year - for 2023 maximum wage rate is $112,800!

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There will be the usual right to seek a review to the Review Division or appeal to WCAT to challenge these fines but again that is more time and cost to employers and no guarantee they will win the appeal.

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Other Changes Implemented with Bill 41

1. Establishing an entirely independent Fair Practices Commission to hear complaints from workers, which would be funded by the Accident Fund;
2. Giving employers and workers the right to request an Independent Health Professional to provide independent advice in a Workers’ Compensation Appeal Tribunal (WCAT) appeal;
3. Requiring interest to be paid on compensation benefits that are determined by the Review Division of WorkSafeBC or WCAT to be owing to a person for 180 or more days;
4. Adding explicit provisions against employers dissuading workers from filing claims, with enforcement through penalties under the WCA (claim suppression);
5. Indexing workers’ compensation benefits to the full rate of annual percentage changes in the Canadian Consumer Price Index for cost of living increase (used to be CPI less one percent); and
6. Increasing the maximum compensation for non-traumatic hearing loss, which is currently capped at 15% of a total disability when there is no loss of earnings.

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Many of these amendments will result in increased claims and benefits costs, which means higher premiums for employers who fund 100% of the workers compensation system. This gives employers a further reason to ensure they understand their obligations under the WCA, and carefully evaluate employees who are injured at work as well as any WorkSafeBC claims started by their workers.

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Please see the "Commencement" table at the end of the Bill for information as to when the various parts of the legislation will take effect – details below:

Employer Takeaways

1. Given additional duties and obligations towards injured workers, employers should evaluate whether they wish to protest new WorkSafeBC claims. Once claim accepted, everything triggered.
2. Avoid terminating workers returning from WorkSafeBC claims within the first 6 months. If you must terminate returning injured workers, make sure you document reasons very well.
3. Communication is key – ensure early communication with worker and Board in event of a claim.
4. Keep an eye out on Regulations to know when some of the amendments come into force.
5. Take these obligations seriously – penalties can have a big impact.
6. Get to know and follow the WCA provisions.
7. Have good record keeping for: date of employment, injury date, termination date, length of time off work.
8. Review human rights law around undue hardship concept.

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

When it comes to gifting property to a relative, the government does not treat it as a gift but as a sale at fair market value. This can result in capital gains taxes if you are gifting property that is not covered by your principal residence exemption and the value has increased since you acquired it. However, if you have an appraisal at a lower value, this may reduce the amount of tax.

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Your taxes could also be reduced by selling the property to a child in exchange for a promissory note (a legal IOU). This may allow you to space your taxes over up to five years and possibly at a lower tax bracket.

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We can work with you and your accountants to come up with a plan than works for your family. Get in touch with Dan today.

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There are two ways you can buy or sell a business – a share purchase or an asset purchase.

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If the business is incorporated, the shares can be purchased. This allows the buyer to gain full control of the business and assume all of its assets and liabilities.

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Alternatively, parties can do an asset purchase. This involves buying all the assets of the business, including tangible items like buildings and inventory and intangible items like copyrights and trademarks. Unlike a share purchase, an asset purchase lets parties exclude certain assets or liabilities.

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As a general rule of thumb, sellers of a business tend to prefer share sales because of the favourable tax consequences for sellers (e.g., capital gains exemptions) and the ability to offload all liabilities of the business to the buyer. Meanwhile, buyers of a business tend to prefer asset purchases because of the favourable tax implications for buyers (e.g., ability to write-off depreciation of certain assets like equipment from the buyer’s taxable income) and the ability to pick and choose which assets or liabilities the buyer will assume.

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If you have questions on this topic or any other legal matters, reach out to Aman Bindra

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To learn more about Disability Insurance Benefits eligibility, definition of "Totally Disabled", submitting a claim and claim denials, wrongful dismissals and cutting off benefits, please read our articles:

1. Overview of Disability Insurance Benefits and Eligibility
2. Applying for Long Term Disability and Denied Claims
3. Calculating Damages in a Wrongful Dismissal With a Disability Benefit Claim

Disability Insurance Appeals

Typically, disability insurance policies provide for an internal appeal process that an insured can try before commencing a civil action if their claim has been denied or terminated. There may be one or more than one round of internal appeal available under the policy.

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Although internal appeals are an option, they're not often the recommended route because unfortunately often times the Insurer maintains their original decision, it causes extra work (and potentially costs) and can lead to delays in filing of a lawsuit.

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The more common approach is to commence a civil action. An insured is not required to use the internal appeal process before commencing a civil action in respect of their benefits entitlement under a disability insurance policy.

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Understanding Your Disability Lawsuit

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Who Are the Defendants in a Civil Action?

The defendants in a civil action for LTD benefits are:

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1. the insurance company (where it underwrites and/or administers the policy);
2. a claims handling company ("third party"), if there is one involved; and
3. the employer (for group policies if the employer underwrites the insurance and/or improperly cancelled the benefits depriving the plan member of access to insurance when they needed it).

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There may be further defendants depending on the circumstances of each particular case.

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What Remedies Are Available in LTD Lawsuits

The most common outcome for a LTD case is a lump-sum settlement being reached at a mediation.

Here is a list of a number of common remedies sought in an action for LTD benefits, including:

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1. A declaration that the plaintiff is entitled to recover disability benefits for the extent and duration of their disability.
2. Payment of all disability benefits due and owing. The remedy in breach of contract is the payment of all disability benefits that the plaintiff would have received had their claim been approved. At the point in time of commencing a lawsuit, there will be a retroactive amount from the date benefits would have first been payable under the policy and, potentially, an ongoing amount in the future (possibly up to age of 65).
3. Future payments.
4. Relief from forfeiture. This is a remedy available to protect a person from a loss of interest or right because of imperfect compliance (not non-compliance) with a condition of a contract. For example, this may arise in disability benefit claims because the insured person may not have submitted their application or proof of claim within the prescribed time period set out in the policy.
5. Waiver and return of premiums. LTD policies typically include a provision for the waiver of premiums during a period of approved disability. Where there has been a dispute about entitlement to benefits, the insured will have continued to pay premiums but will not have received the benefit of the insurance. In an action for breach of contract then, the plaintiff should request a reimbursement for the premiums they have paid, but which they would not have had to pay had their claim been approved.
6. Payment of any income tax or income tax interest and penalties that might arise due to a delay in the payment of benefits, resulting in a lump sum award at trial. Disability benefits might be taxable or non-taxable depending on the policy and who pays the premiums. Typically, if premiums are paid entirely by an employee, then the benefits are non-taxable whereas, if some or all of the premium is paid by the employer, the benefits are taxable. Taxable benefits become taxable damages when awarded as a lump sum by a court. Thus, the plaintiff should seek an order that the defendant be liable to pay all extra income tax payments due, interest, and/or penalties resulting from the delay in benefits and resulting lump sum for arrears awarded at trial.
7. Damages. In a disability benefit action, there may be cause for general damages flowing from the breach of contract, mental distress damages (both arising out of a breach of contract and "true aggravated damages", and punitive damages). Typically, aggravated and punitive damages are pleaded in LTD cases.

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Documentary Discovery and List of Documents

After commencing a civil action, the insured or their counsel can start building the file with a view to preparing the List of Documents. As with all civil litigation, documentary disclosure is an ongoing process.

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There tends to be a standard set of documents for disability benefit files. Typical documents include:

1. Insurance file. Insurance policy (with any amendments) and employee benefit handbook.
2. LTD claim file. Employee, attending physician (with medicals), and employer forms.
3. Appeal file. If the insured has appealed internally, there will be the appeal submission, medical documents, and the insurer's decision letter.
4. Correspondence file. All correspondence between insured and insurer (or claims handling company), including benefit denial or termination letters.
5. Medical file. All relevant clinical notes and records ("CNRs") covering the disability period, including medical reports, test results, imaging, etc.
6. Employment file. Employment contract (or collective agreement), group health benefit plan documents, T4s covering the disability period, termination letter (if applicable), workplace injury and WSIB forms (if applicable), human rights workplace accommodation documents (if applicable).
7. Income file. Other sources of relevant insurance or disability benefit income.

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Documents the insurer typically requests for the insured to obtain include:

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1. personal claims history for the time period of disability;
2. pharmacy prescription drug summaries;
3. income tax returns covering the disability period; and
4. CPP disability records.

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Our experienced Employment & Disability Group is ready to review your claim in a free consultation, and assist you. Get in touch today.

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

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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.

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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.

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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).

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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.

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

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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.

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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.

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

When an employee has been absent from work during the past few months due to illness or injury, they may be eligible for benefits under the Long Term Disability Plan (LTD) if they are unable to return to full duties. To learn more about Disability Insurance Benefits eligibility and definitial of "Totally Disabled" please ready our article Overview of Disability Insurance Benefits and Eligibility. For more information on disputing denied insurance claims and overview of the legal process involved, please read Disputing Denied Disability Claims, Remedies and Overview of Legal Process.

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Submitting a Claim for Disability Benefits

The benefit booklet (and policy) will describe and set out the details for submitting a claim for disability benefits in the event of an illness or injury. Typically, the employee will notify the employer of the incident and need for a medical leave of absence from work. The employee should request the claim forms from the employer (human resources or plan administrator) or otherwise contact the insurer directly to request the application forms as directed in the handbook.

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Claim forms typically include three separate forms:

1. the employee or plan member form;
2. the employer form; and
3. the plan member's attending physician form.

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Our Disability Lawyers can assist you in completing the plan member form and facilitating the doctor to complete the attending physician form, if these forms have not already been completed and submitted. The benefit booklet and insurance policy will confirm the process for providing Notice or Proof of Claim and the deadlines for submitting a claim.

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What if My Disability Claim is Denied?

Disability insurance is based primarily on contract law principles. The insurance contract (i.e., the policy) sets out the applicable terms and conditions. Each policy is unique and it's important to have an experienced lawyer carefully and thoroughly review each policy for its specific details. If an insurer denies or terminates a claim for benefits or fails to adjudicate a claim in a timely and good faith manner, the insured may have a cause of action for breach of contract and/or breach of the duty of good faith.

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There is no requirement to participate in an insurer's internal appeal process before commencing an action, though it may be wise to do so depending on the circumstances (e.g., if the initial application did not accurately describe the disability and/or did not provide sufficient medical evidence in support of the application and appeal might be warranted). Damages for breach of contract in disability benefit cases is the same as any other breach of contract case: to put the plaintiff in the same position had the contract been performed.

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An action for breach of a disability insurance contract will focus on the denial of benefits or termination of benefits after one has been approved for a period of time. The related damages will center on the disability benefits that the plaintiff would have received had the claim been approved for the extent and duration of the entitlement under the policy.

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Disability Insurer's Duty of Good Faith

An insurer owes a duty of good faith to an insured. Insurance contracts are considered to be contracts of utmost good faith and, accordingly, there is an implied obligation in every insurance contract that the insurer will deal with claims from the insured in good faith. The duty of good faith requires the insurer to act both promptly and fairly when investigating, accessing, and attempting to resolve claims made by an insured person.

A breach of the duty of good faith by an insurer is an independent actionable wrong giving rise to damages.

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Wrongful Dismissals and Disability Benefits

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. More on this topic in our article Wrongful Dismissals and LTD (Disability) Benefits.

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Our experienced Employment & Disability Group is ready to review your claim in a free consultation, and assist you. Get in touch today.

Disability insurance (short-term and long-term) is designed to provide one with income replacement or supplement in the event one becomes disabled due to an injury, illness, or accident and cannot work. Typical disability insurance policies provide for monthly benefits of 60-85% of one's regular monthly earnings.

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Disability insurance is governed by the insurance policy, the Insurance Act, RSBC 2012, c 1, and common law principles.

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There are a variety of sources of disability income, LTD is one of them. Others include:

- employer sick pay,

- Employment Insurance sickness benefits,

- short-term disability insurance ("STD"),

- Canada Pension Plan disability pension ("CPPd"),

- Disability Tax Credit,

- Workers Compensation, and

- BC Disability Assistance.

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Disability Insurance - Peace of Mind Contract

Disability insurance is a "peace of mind" contract. This means that disability insurance is meant to provide the insured with: (1) income replacement during a period of disability when they cannot work; and (2) the reassurance of financial security during such a period. The Supreme Court of Canada in Fidler v. Sun Life Assurance Co. of Canada, [2006] S.C.J. No. 30 at paras. 39 and 57 ("Fidler"), described disability insurance as "where the very object of [the]insurance contract is to provide… peace of mind…" and commented that "the intangible benefit provided by such a contract is the prospect of continued financial security when a person's disability makes working, and therefore receiving an income, no longer possible."

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Two Types of Disability Policies

There are two broad categories of disability insurance policies: group policies and individual policies. Individual policies are characterized by a one-to-one relationship between the insured and insurer. Group policies are a single insurance policy issued to a group or association (e.g., employer or union) to which all eligible members of that group may be insured under the policy. The employer may pay some or all of the premiums on behalf of the individual insureds. Employees become plan members, but do not have direct privity of contract.

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Eligibility for LTD Benefits: "Totally Disabled"?

The standard required in disability policies to be eligible for benefits is "totally disabled". Each insurance policy will have its own slightly different definition but, generally, it means that the insured person is unable to perform the essential duties or majority of their job due to an injury or illness.

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While the insurance policy generally governs the test for total disability, BC and Canadian courts have also weighed in on what "totally disabled" means:

An insured is considered to be totally disabled from performing her own occupation where she is unable to perform 'substantially all of the duties of that position.' Total disability does not mean absolute physical disability, but rather that the insured's injuries are such that common care and prudent require her to desist from her occupation in order to effectuate a cure: Paul Revere Life Insurance v. Sucharov, 1983 CanLII 168 (S.C.C.), [1983] 2 S.C.R. 541, at para. 546.

You may also be considered “totally disabled” if:

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1. You cannot work your regular job in the short-term.
2. You cannot work your regular job in the long-term.
3. You can currently work PART-TIME at your own job.
4. You can currently work PART-TIME at another job.
5. You can perform SOME tasks of a job, but not all.
6. Ceasing to work can improve your quality of life or prolong your life.

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Most disability policies have two different time periods during which the definition of "totally disabled" is applied differently:

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1. the "own occupation" period that refers to the insured's pre-disability job and that typically runs for the first 2 years of disability; and
2. the "any occupation" period that broadens the definition to include any occupation for which the insured is suitable by education, training, and skill.

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Disability Insurance Information

Continue learning about submitting a Long Term Disability Claim and claim denials, wrongful dismissals and cutting off benefits, disputing claims and overview of the legal process in our related Disability Articles:

1. Applying for Long Term Disability and Denied Claims
2. Calculating Damages in a Wrongful Dismissal With a Disability Benefit Claim
3. Disputing Denied Disability Claims, Remedies and Overview of Legal Process

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Our experienced Employment & Disability Group is ready to review your claim in a free consultation, and provide you with invaluable information and assistance. Get in touch today.

On December 1, 2022, federally regulated private sector employees will gain 10 days of sick leave per year with amendments to Part III of the Canada Labour Code. Here’s what you need to know.

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Since the beginning of the pandemic, employers have struggled to navigate perpetually changing Covid policies and procedures. Further, many employees simply cannot afford to stay home after testing positive for Covid, but are legally obligated to due to mandatory isolation periods. In response to these issues, governments across the country are implementing variations of paid sick day provisions.

The Government of Canada’s introduction of 10 paid sick days for federally regulated private sector employees will impact approximately 6% of Canadian workers employed by 18,500 employers (article here). On December 1, 2022, the new paid medical leave provisions will come into force. An Act to amend the Criminal Code and the Canada Labour Code (BillC-3), which received Royal Assent in December 2021, amends Part III, Division XIII (Medical Leave)of the Canada Labour Code, RSC, 1985, c L-2 (“the Code”).

Additionally, there are proposed changes to the Canada Labour Standards Regulations, CRC, c 986 (the “Regulations”) which will provide detailed guidance on the operation of the new provisions. Currently, they are slated to come into force at the same time as the changes to the Code.

How It Will Work

Employees who are newly hired will not be entitled to the full ten sick days immediately. Once an employee has been employed for 30 continuous days, they will be eligible for three paid sick days. From thereon, employees will gain one additional sick day per month work, with a maximum of ten paid sick days per year. Additionally

[a]nydays of medical leave with pay that an employee does not take in a calendar year will carry forward to the next calendar year and each day carried over reduces the number of days that can be earned in that next year by one [Canada Gazette]

If an employer uses a different year, other than a calendar year, for calculating vacation pay, the Government of Canada currently directs these employers to “use that same year for the purposes of the paid medical leave provisions.”

Employees who take sick days will be paid their ‘regular rate of wages’. If an employee does not have a standard set of working hours each day, section 17 of the Regulations states that their regular rate of wages would be calculated as follows:

(a)  the average daily earnings of an employee (other than overtime pay) for the 20 days the employee worked immediately before the first day of the period of paid leave; or

(b)  an amount calculated by a method agreed on under or pursuant to a collective agreement that is binding on the employer and the employee.

The Regulations will mandate employers to keep records of the following:

1. The dates of commencement and termination of the leave;
2. The year of employment in respect of which the leave was earned;
3. The number of days of leave carried over from a previous year;
4. A copy of any written request for a medical certificate made by an employer; and
5. A copy of any medical certificate submitted by an employee

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Additionally, employers may instruct employees to take sick days “in periods of not less than one day” and may ask that employees provide a medical certificate if they go on sick leave for at least 5 consecutive days.

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Who is a Federally Regulated Private Sector Employee?

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The 10-day sick leave applies to workers employed at Federal Crown Corporations and Federally regulated private sector employees. This includes the following:

1. International and interprovincial transportation by land and sea, including railways, shipping, trucking and bus operations;
2. Airports and airlines;
3. Port operations;
4. Telecommunications and broadcasting;
5. Banks;
6. Industries declared by Parliament to be for the general advantage of Canada or for the advantage of two or more provinces, such as grain handling and uranium mining; and
7. First Nations Band Councils

Employees who are part of the Federally regulated public sector will not be eligible for the 10-day sick leave (such as the Federal Public Service and Parliament).

Part II (occupational health & safety) and Part III (standard hours, wages, vacations &holidays) of the Canada Labour Code only apply to the employee/employer relationship, and therefore does not apply to independent contractors. Accordingly, independent contractors will not be eligible for 10 days of paid sick leave either.

If you are unsure whether these changes impact your workplace, or if you have any questions about this topic, please do not hesitate to get in touch with our Employment & Labour Group.

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Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our group members. We communicate all these updates to our clients and readers on our Employer Resources Portal and through monthly Newsletters.