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Termination Pay Entitlement

Expert: Belinda Sutton

Bill asked:

If I have quit work due to a Workplace Safety and Insurance Board-compensated claim because of being subjected to asbestos by the employer, does the employer have to pay termination pay or severance pay?

Belinda Sutton answered:

The Employment Standards Act imposes an obligation to provide notice of termination or termination pay and severance pay when an employer terminates an employee. In most cases then, an employee who quits his or her employment is not entitled to either termination pay or severance pay.

An employee who is suffering from an illness or injury (whether or not it is compensated by the Workplace Safety and Insurance Board) is not obliged to quit his or her employment. He or she may be entitled to termination and severance pay under the Employment Standards Act if the employer initiates the termination of the employment relationship.

Disrupted Contracts Due to Injury
An employer may be relieved of the obligation to pay termination and severance pay if, subject to protections under the Human Rights Code, the contract of employment is "frustrated or has become impossible of performance" as a result of the illness or injury. Inquiries regarding rights under the Human Rights Code must be directed to the Ontario Human Rights Commission.

The doctrine of frustration and impossibility of performance is complex and fact specific, but, generally, a contract is frustrated or becomes impossible of performance when some unanticipated event occurs preventing either party from fulfilling their part of it. However, an employer cannot claim frustration of contract if the employer is responsible for the frustrating event (e.g. an illness or injury caused by the employer's violation of health and safety laws).

Re-employment Rights & Suitable Work
In addition, the Workplace Safety and Insurance Act provides that a worker who is off work due to a work-related illness or injury may have rights to re-employment. In certain cases, it will provide a worker with a right of re-employment to his or her former job (or a comparable one) when the worker is medically able to perform the essential duties of that job.

If the worker is not able to perform the essential duties of his or her former job, but is medically able to perform suitable work, then the employer is required to give the worker the first opportunity to accept suitable work that may become available with the employer. The employer has a duty of accommodation (similar to the duty of accommodation under the Human Rights Code) in that it must modify the work or the workplace to the needs of the injured worker to the extent that such modifications do not cause undue hardship to the employer. There are special rules regarding the re-instatement rights of construction workers. Inquiries regarding rights under the Workplace Safety and Insurance Act must be directed to the Workplace Safety and Insurance Board.

Termination of Contract
The Ontario Ministry of Labour will interpret the doctrine of frustration in light of any right of re-employment an employee may have under the Workplace Safety and Insurance Act. If the prognosis for the worker is that he or she will likely never be able to perform his or her old job again, but may be able to perform “suitable work” within the period during which the re-employment rights exist, the contract of employment would not be considered as frustrated or impossible of performance. Therefore, if the employee is terminated, the employer may be liable for termination and/or severance pay under the Employment Standards Act, 2000.

About the author

Belinda Sutton is a Communications Officer with the Ontario Ministry of Labour.

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