Collecting Long-Term Disability? What happens to your job?

By Matt Lalande in Long-Term Disability on April 22, 2018

What Happens to your job if you are collecting long-term disability?

4 Minute Read.

If you are on long term disability past the change of definition or the two year mark, then you are essentially disabled from any occupation from which you are reasonably suited by education, training and experience…i.e. you have a permanent disability.  This is what you have proven to your long term disability carrier by way of medical evidence supporting your disability or illness.

A permanent disability on the part of an employee which prevents you from fulfilling the functions required by the job will normally (at some point) result in the frustration of the contract of employment.  If you are terminated due to the frustration of your employment contract, it will not be based on “just cause” but what is called the “doctrine of frustration”.

The simplest way to understand what frustration of the employment contract is to ask the question whether your disability will put an end, in a business sense, to your capacity to work and therefore frustrate the foundation of the employment contract.  Is your illness and injury serious enough to keep you on LTD – now that you are past the COD date?

What about a short or routine illness?

This very rarely acts to frustrate the contract of employment.

Whether an illness or injury will cause frustration depends on the facts of each case, taking into account the relationship, the incapacity, the absence from work and the duration of the contract. Generally with a long-term employee it is more difficult to prove frustration.

Who proves the contract is frustrated?

The onus is on your employer to prove the contract of employment has become frustrated.  It is not on you to provide medical evidence with respect to your ultimate prognosis – rather, it is a matter of permanent vs temporary illness or injury.

In determining whether your contract of employment is frustrated because of your illness or disability, our Courts set out a “five-fold test” in a case called Marshall v. Harland & Wolff Ltd.

The relevant questions for determining whether your contract of employment is frustrated are:

(a) what the terms of the contract are, including provisions for sickness pay;

(b) how long the employment was likely to last in the absence of sickness;

(c) the nature of the employment;

(d) the nature of the illness or injury and how long it has already continued and the prospects of recovery; and

(e) the period of past employment.

How about some examples?

In a case called Yeager v. R.J. Hastings Agencies the court weighed these factors and held that a two-year illness did not frustrate the contract of employment of an employee of 30 years whose position did not require a permanent replacement in the event of a prolonged absence.

An illness for a period of over a year and one-half has been held temporary and insufficient to frustrate the contract of employment.

In another case, a permanent ankle injury due to arthritis was held sufficient to frustrate the contract of employment even though the employer was unaware of the permanent disability at the time of the termination of employment.

Where an employee could not perform the substantial duties of his position and it was found that the illness causing the disability was likely permanent, the contract of employment was held to be frustrated.

In another case, an employee who had been off work over two and a half years, had been on long term disability (but lost them because of not following the insurer’s medically recommended treatment to assist in recovery), and had continued to be disabled, a prognosis supported by his own medical professionals, was found to have had his contract of employment frustrated.

Similarly, an employee who had been off work for over three years, had provided medical reports supporting long-term disability, had been approved for long term disability benefits benefits (but was terminated from them for not cooperating with the insurer) and failed to provide evidence showing he could return when asked to do so by his employer was found to have had the contract of employment frustrated.

What defines a permanent disability?

The finding of permanent disability must be based on objective evidence. Neither the employee’s nor employer’s subjective belief is sufficient.

Will I be paid severance pay if I am terminated due to my contract being frustrated?

In Ontario, statutory severance is available to employees even if the contract of employment has been frustrated because of illness or disability.

Hamilton Long Term Disability Lawyers

If you have a disability or employment related issue that you would like to speak about please do not hesitate to contact us at 905-333-8888 or fill in a contact form and we will promptly get back to you.