Can Employers Terminate Employees While They are on Leave?

June 17th, 2013 by Carrie Kennedy

This blog post was written by employment lawyer, Carrie Kennedy in response to the question: “Can employers terminate the employment of an employee while that employee is on pregnancy leave, parental leave, or any other type of leave?” Of course they can. However, doing so may be a costly decision.

The Employment Standards Act, 2000 (the “ESA”), similar to the Canada Labour Code, provides that “upon the conclusion of an employee’s leave under this Part, the employer shall reinstate the employee to the position the employee most recently held with the employer, if it still exists, or to a comparable position, if it does not”. Despite this obligation on an employer to reinstate an employee when a period of leave ends, an employer may terminate that employee’s employment for a number of reasons including: a) the position no longer exists and there are no comparable positions to offer to the employee; b) the employer terminates the employment in compliance with the termination and severance requirements in the applicable legislation; or c) the employer has grounds to dismiss the employee that are completely unrelated to the fact that the employee is on leave.

Both the Canada Labour Code and the ESA both have case law decided under them that clearly state that, while the legislation is designed to protect employees on leave, they are not designed to provide greater rights to employees who go on leave than to other employees. Although an employer may terminate the employment of an employee on leave, employers must be sure not to treat employees who are on leave more poorly than those employees who are not on leave. Often, an employee on leave will believe their rights or protections have been violated if dismissed while on leave and they will seek further compensation from the employer. The termination, therefore, even if part of a corporate reorganization, might come at quite a cost to the employer.

In the recent case of Moday v. Bell Mobility Inc. 2013 CarswellNat 393, Moday, an 11 year employee of Bell Mobility, received a termination letter from Bell Mobility while she was on maternity leave. Bell Mobility argued that, due to downsizing, it had eliminated Moday’s job and all comparable jobs, so there were no comparable positions to which she could return. In this case, Bell Mobility had eliminated about 220 jobs in its reorganization. Although Bell Mobility offered Moday a severance and termination package that exceeded the requirements of the Canada Labour Code, she brought an action against Bell Mobility for wrongful dismissal. The arbitrator dismissed Moday’s complaint. It found that an employer may dismiss someone on leave when the employee’s job is eliminated and there are no comparable jobs to be offered, the right to be reinstated does not trump an employer’s right to reorganize, and being on leave does not put an employee in a superior position to other employees who also lose their jobs during a corporate reorganization.

The downside to an employee who is terminated while on leave is obvious: the employee loses his or her job. The downside to an employer who terminates the employment of an employee while he or she is on leave is that it might be a very costly decision. The employer will be required to pay, at a minimum, the amounts set out in the termination and severance provisions of the applicable legislation. It will also likely have to pay legal fees if that employee brings a civil action against it for wrongful termination or makes a complaint against it before the Human Rights Tribunal. It is likely that an employer will either have to voluntarily pay an employee an amount that exceeds the minimum legislated standards in order to avoid litigation or it will be ordered to do so if unsuccessful in litigation. What this means for an employer is that, while it may technically act within the bounds of the law in terminating the employment of an employee on leave in certain circumstances, it may cost much more to terminate that employment compared to terminating the employment of an employee who is not on leave.

For more information on Canada Labour Code, Employment Standards Act and Notice and Termination of Employees for Employers or if you need an employment lawyer, contact Carrie Kennedy or one of the employment law lawyers of Devry Smith Frank LLP, listed on our website by clicking on their name.

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