Many agreements have included clauses which purport to give to the employer the right to terminate, or more acutely, state that the agreement has been terminated, should the employee be absent for medical reasons for a stated time period.
Apart from the commentary which follows, such a clause is likely in violation of human rights legislation which prevents termination by operation of contract due to a disability. The same law also requires affirmative steps to accommodate a disability, absent undue hardship. This issue is reviewed in more detail here.
In addition, the Ontario Court of Appeal has determined that where termination has resulted from a medical disability, the employee is still entitled to severance under the statute.
Juriansz J.A. in Ontario Nurses Association and Mount Sinai Hospital found that this provision of the Employment Standards Act was contrary to Section 15 of the Charter of Rights and Freedoms.
Accordingly the defence of frustration is no longer a bar to receipt of the statutory severance sum in Ontario. It is to be noted that the purpose of the severance pay provision is philosophically distinct from that of the common law wrongful dismissal claim. The severance pay due for under the statute is intended to act as an acknowledgment of past service. It is clear that there is no mitigation obligation required to receive this statutory payment.
Such a clause which purports to give the employer the right to terminate in this context is clearly offside both the statute and human rights obligations.
The Supreme Court of Canada considered the issue of a collective agreement which defined the acceptable time period allowed off work due to a medical disability in its 2007 decision of McGill University Health Centre at three years.
Alice Brady, a union member, began a medical leave from her position as a medical secretary due to a nervous breakdown in March of 2000. She attempted to return to work on a gradual basis from June 2000 to February 2001 at three days a week. The collective agreement called for a maximum of 6 months for rehabilitation. As there was no progress in her status, the employer requested that she stay home until she was able to work full time. It was agreed that the date for a return to work was extended to September 2001 and again ultimately to November 2001. The return was short lived. An alternative date was set for September 2002 but in the intervening period, Brady was in a car accident on July 28, 2002.
The agreement stated that periods of rehabilitation did not extend the disability period, which was set by the agreement at 3 years. On March 12, 2003, the employer advised that her employment would be terminated on April 3, 2003.
On the date of her grievance hearing on November 5, 2003, she remained disabled and was waiting for a shoulder operation. At such time the date of her expected return to work was indefinite.
The arbitrator dismissed the grievance as the employer had provided fair accommodation and because the grievor remained disabled upon the expiry of the three year period stated in the agreement.
On the first review, the court upheld the arbitrator’s decision, holding that the grievor did have a medical handicap, but the employer took reasonable measures to accommodate it.
The Court of Appeal reversed, finding that the arbitrator had not looked to the specific facts to determine fair accommodation, but rather had applied the agreement mechanically.
Leave was granted on the issue of the scope of the duty to accommodate and as a subordinate issue, whether it was possible to define this by way of a collective agreement.
The Factors of Undue Hardship – Common Sense
The Court considered that in an issue of undue hardship, the factors are not defined, but “must be applied with common sense and flexibility”. These will include “the cost of possible accommodation method, employee morale and mobility, the interchangeability of facilities, and the prospect of interference with the other employees’ rights or of disruption of the collective agreement”.
This was consistent with the decision of the Supreme Court in Renaud v Central Okanagan which it stated:
The use of the term "undue" infers that some hardship is acceptable; it is only "undue" hardship that satisfies this test. The extent to which the discriminator must go to accommodate is limited by the words "reasonable" and "short of undue hardship". These are not independent criteria but are alternate ways of expressing the same concept. What constitutes reasonable measures is a question of fact and will vary with the circumstances of the case.
Ontario Code Defines Hardship Factors
The Ontario Code in 11(2) defines the factors to be considered:
(2) The Tribunal or a court shall not find that a requirement, qualification or factor is reasonable and bona fide in the circumstances unless it is satisfied that the needs of the group of which the person is a member cannot be accommodated without undue hardship on the person responsible for accommodating those needs, considering the cost, outside sources of funding, if any, and health and safety requirements, if any. R.S.O. 1990, c. H.19, s. 11 (2); 1994, c. 27, s. 65 (1); 2002, c. 18, Sched. C, s. 2 (1); 2009, c. 33, Sched. 2, s. 35 (1).
Canadian Human Rights Act
Canadian Human Rights Act defines under section 15(2) the considerations to be as follows:
(2) For any practice mentioned in paragraph (1)(a) to be considered to be based on a bona fide occupational requirement and for any practice mentioned in paragraph (1)(g) to be considered to have a bona fide justification, it must be established that accommodation of the needs of an individual or a class of individuals affected would impose undue hardship on the person who would have to accommodate those needs, considering health, safety and cost.
Period of Disability Set by Contract
The Court concluded that the fact that the parties had negotiated a time period of three years as the period of accommodation is a factor to be considered, but does not definitively rule the day as each case must be examined on its own facts. It is, however, a significant factor. Such a clause will serve as evidence of the maximum period beyond which the employer will face undue hardship.
However, the parties cannot, in effect, contract out of the protections of the human rights statute by agreeing to a lesser period that would be applicable to his case. Nonetheless, the agreed clause will have considerable impact in the assessment of hardship.
The Court agreed that the initial arbitrator had taken into account the accommodation measures undertaken by the Hospital, which had agreed to steps beyond the contracted period, but also “the dynamics leading to the failure of the attempt to return to work before the expiry of the three year period and, finally, the state of Ms. Brady’s health after the employer’s decision”. Given that the grievor remained with an uncertain medical state even as of the date of hearing, the employer’s conduct was reasonable.
Accommodation Not One-Sided
From a principled position the Court agreed that the arbitrator considered the impact of the termination clause in context. The duty to accommodate, the Court ruled, was not one-sided. The grievor, if able to return to work in the near future, had an obligation to introduce such evidence.
38 The duty to accommodate is neither absolute nor unlimited. The employee has a role to play in the attempt to arrive at a reasonable compromise. If in Ms. Brady’s view the accommodation provided for in the collective agreement in the instant case was insufficient, and if she felt that she would be able to return to work within a reasonable period of time, she had to provide the arbitrator with evidence on the basis of which he could find in her favour.
What all this means for the writer of an employment contract is that the agreement may set out a time period of acceptable absence, which will not be conclusive, but will be of value in determining the issue of undue hardship in the duty to accommodate.
The duty to accommodate is reviewed in more detail here.