(905) 526-9800 or 1 (866) 526-9800 contact@rossmcbride.comA+ A-

How long does an employer have to keep a job open for an employee on sick leave?

ANSWER: The question brings into play both the Ontario Human Rights Code and the Employment Standards Act.
Pursuant to the Code, you have an obligation to hold your employee’s position open to the point of undue hardship. After 3.5 years, if recent medical information confirms that there is no prospect of a return to work in the foreseeable future, it is not likely that you would get in trouble with the Ontario Human Rights Tribunal. Employers who have been held responsible to hold the position as long as you have were very large employers that could have easily accommodated a return to work after such a lengthy period.
Under the Employment Standards Act, you will be required to pay termination pay of one week per year to a limit of 8 weeks based on their most recent wages and vacation pay on that amount. If they have been with you more than 5 years (including the sick time) and you have a payroll of over 2.5 million, you would also owe them severance pay of a week per year to a limit of 26 weeks.
Quite frankly, if you don’t have a benefits plan for them which is costing you ongoing money, sending that termination letter could be an expensive and fruitless exercise. After 3.5 years it is unlikely they are ever coming back. Paying termination and severance pay just to avoid the possibility of them showing up looking for their job might not be worth it.
If you have a benefits plan and you cover all or part of the premium costs, there are different considerations. In order to not pay for benefits coverage indefinitely, it may be worth it to you to trigger the termination and severance payments.
Increasingly, employers are developing policies which indicate that an employee who is off for more than 12, 18 or 24 months on a leave of absence will have their benefits discontinued. Maternity and paternity time off do not count. If this policy is already in place and you discontinue benefits, it will not constitute discrimination under the Ontario Human Rights Code and it will not allow the employee to take the position that you have terminated them by discontinuing their benefits coverage. You are simply following the established policy.
Since there is no law requiring you to provide benefits coverage, if you want to develop a policy discontinuing them after a certain amount of time, you can.
If the employee would regularly contribute to the costs of the benefits, you can require them to continue those payments while they are off ill. You could also develop a policy indicating that after a certain amount of time, instead of paying half of the cost of the benefits, the employee has to pay 100% of the cost for them to continue.
There was one Court decision a couple of years ago where a Judge decided that an employee who went off ill and passed away a couple of months later was entitled to termination pay as a result of frustration of contract. The Judge found that sometime between the point that he went off ill and passed, the contract had become frustrated as a result of his illness and impossible to perform. The Judge decided this notwithstanding that the employer had done absolutely nothing but wait for the employee to return to work, hoping that he would recover. No benefits were terminated. No letter sent ending the relationship. The Ministry of Labour, appropriately, is ignoring this decision. The wording of the Employment Standards Act clearly requires the employer to take some sort of action in order for it to be deemed that the termination has occurred.
Ed Canning practices labour and employment law with Ross & McBride LLP, in Hamilton, representing both employers and employees. You can email him at ecanning@rossmcbride.com.
Ed Canning
Ed Canning
P: 905.572.5809