Your Legal Rights in Disability Insurance Disputes

| June 9th, 2016 | No Comments »

disabilityAn employee who becomes disabled, or otherwise becomes incapable of performing the essential functions of their job, and may be entitled to income replacement through the employer’s short-term and long-term disability insurance policies.  The process is not always straightforward, making it important for both employees and employers to understand their rights:

For Employees

Employees have a basic right to dignity and fair treatment in having their disability insurance claims assessed.  While medical evidence will be required to substantiate a claim for disability insurance coverage, the employee will not be subject to the whim of the insurer’s medical team.

Similarly, the employee has the right to have their claim fairly treated, and on the presumption that their claim is legitimate.  An employer or provider that treats an employee with suspicion about the validity of the claim may find itself in hot water if the claim is rejected.

It is common to see an employee’s disability insurance coverage terminated before they are fit to return to work.  An employee may also find their initial application rejected, despite not being able to perform their duties.  Employees are entitled to challenge unfair or unsupported determinations about their coverage, which means that the employee should promptly retain legal counsel if this situation arises.

The result of this right is that the employee is entitled to retain their employment with the employer while receiving disability insurance benefits.  This right, however, is not absolute.

For Employers

In very limited circumstances, the employer may have the right to dismiss a disabled employee, where it appears that the employee will be unlikely to perform the essential functions of their job for the foreseeable future.  An employer should never dismiss a disabled employee without first obtaining sound legal advice.  Disability is a protected ground under both federal and provincial human rights legislation, which means that dismissing a disabled employee may constitute discrimination.

Employers also have the right to be appraised of the status of the employee’s insurance claim.  If disability insurance coverage is rejected or discontinued, the employer may be at liberty to require the employee to return to work, or to dismiss that employee.  These steps should not be taken without legal advice, as termination of disability insurance coverage does not circumvent an employer’s obligations under human rights legislation.

 

Author: Marc Kitay, Whitten & Lublin

Breaching unwritten terms in employment contracts can be constructive dismissal

| July 3rd, 2013 | No Comments »

In a recent case from British Columbia, the BC Court of Appeal confirmed the lower court’s judgment that failing to pay an employee their annual bonus can be constructive dismissal, even if the bonus was ostensibly discretionary and not a written term of the employment contract.

In Piron v. Dominion Masonry Ltd., the employee, Mr. Piron, was a 19-year veteran of the company. Initially, he was paid hourly, but after a few years his compensation was changed to a combination of hourly wages and a per-project bonus. These bonuses made up a significant portion of his annual income, typically being between $10,000 and $20,00, and in one year being as high as $90,000.

In his final year with the company, amid deteriorating economic conditions, the employer refused to pay Mr. Piron a bonus. After attempting to negotiate one, he was given an ultimatum: work for his hourly wage, or quit.

The employee took the position that this failure to pay him a bonus was a breach of the employment contract and that he had thus been constructively dismissed. His employer countered that the bonuses were purely discretionary, and did not form part of the employment contract.

 

Court’s decision on constructive dismissal

The Supreme Court of British Columbia (BCSC) sided with Mr. Piron, finding that the bonuses had become part of the employment contract. By unilaterally failing to pay the bonus to which Mr. Piron had become accustomed and was now entitled, the employer breached the employment contract and constructively dismissed Mr. Piron. The BCSC awarded him 15 months salary as damages in lieu of notice; however, the Court declined to award damages in respect of the unpaid bonuses.

On appeal, the BC Court of Appeal not only affirmed the constructive dismissal decision, but also increased the quantum of damages to reflect the unpaid bonuses, in light of the fact that Mr. Piron had become entitled to them under the employment contract.

 

Lessons on breaching unwritten terms in employment contracts

The lessons for employers and employees are clear: the consistent payment of bonuses can lead to their becoming part of the employment contract, even if they are not part of the written employment contract that the employee signed. More generally, the terms of an employment contract are not always limited to the written words of the contract; other terms can become part of the contract through the parties’ consistent behavior or demonstrated intentions. Unilaterally breaching the terms of an employment contract – including unwritten terms – will land the breaching party in hot water, regardless of external circumstances such as a declining economy. As this case has shown, breaching unwritten terms in employment contracts can be grounds for constructive dismissal.