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Why Companies Can Be On The Hook For Benefits Post-Termination

Pasap v Saskatchewan Indian Gaming Authority and Bear Claw Casino should be required reading in the benefits industry and employers. The story is simple. Jonathan Pasap worked for the Bear Claw Casino. He had suffered a back injury in 2011. He went on disability that same year and returned to full-time work in April 2012. However, his performance had declined noticeably.

Pasap’s superior gave him an ultimatum in a meeting. Either quit or get fired. Four months after the working relationship ended, Pasap collapsed due to congestive heart failure.

At trial, Pasap argued that he was terminated in that meeting. The employer argued he quit.

Because the casino gave him an ultimatum to either quit or be fired, the court ruled Pasap was fired and entitled to 8 months. However, the judge in the case also determined that Pasap satisfied a higher definition of long-term disability. As a result, he ordered the casino to pay Pasap 26 years’ worth of disability benefits. 

Several lessons can be drawn from this story, not the least of which is the need for employers to know the law and their benefits packages inside and out. Bear Claw Casino could have saved themselves a lot of grief had they done their due diligence and acted accordingly. 

Here are some tips on how employers can avoid liability after a worker is terminated.

Read your own benefits package

Once the startup enters into a contract with an employee, they are required to keep their end of the bargain. An employer’s human resources department should know their benefits package inside and out as though they would be required to recite it at the gates of heaven. If employees feel they have not been given the benefits they are entitled to; costly litigation will be in the employer’s future. 

Benefits assessments are invaluable if a startup needs help with its obligations. Providers can always aid a company when asked. 

Read the minimum employment standards law

Each province has employment standards laws. Ontario’s is called the Employment Standards Act. This lays out all the minimum standards an employer needs to meet while a worker is with them—everything from basic conditions of employment to leaves of absence and, yes, obligations upon termination. 

Some examples of obligations around termination include:

  • An employee who has been given written notice of termination can resign and continue to keep the right to severance pay. To support this right, the employee must provide the employer with two weeks’ written notice of their resignation.
  • The maximum amount of severance pay an employee is entitled to is 26 months’ worth of their salary.
  • Severance pay is not the same as termination pay, which is given in place of the required notice of termination of employment.

Employers should follow provisions in the act to the letter to avoid future harm. 

Know your obligations under long-term disability laws

Employees are entitled to long-term disability benefits. Canada has a national standard on long-term disability. Employers can be on the hook after terminating a worker if the law is not adhered to. 

The standard includes rights such as:

  • If you wish to request leave without pay for illness or injury, you must provide a medical certificate from your physician.
  • Once the Pay Centre receives the necessary documentation from your departmental human resources team, it will provide you with a benefits letter outlining the impact your leave period without pay will have on your benefits.
  • There may be the potential that your position could be filled permanently while you are on leave without pay. This generally happens if your period of leave exceeds one year. Your manager will be in contact with you if this occurs.

While these provisions benefit the employee, leaders can also learn their obligations. Go through them with a fine-tooth comb to understand what is expected of you. 

If in doubt, consult a lawyer

Startups are new to the game. They might not have been around the block enough to know what is expected of them. They might also be neck-deep in the workings of their company to have the institutional wisdom needed to do what expected of them during a termination. 

Ultimately, all companies are navigating the law when it comes to their workers. So it should be incumbent upon them to seek help where they can find it. Employment lawyers are worth their weight in gold when it comes to this.