As an employer, understanding the legal framework surrounding employee leaves is crucial to mitigating risks and ensuring compliance with employment laws. Employers may face challenges when making business decisions that impact employees on leave, including questions about whether termination is permissible during a leave of absence.
Statutory versus Non-statutory Leaves
Employers should first distinguish between statutory leaves and non-statutory leaves when considering terminating someone on leave.
Statutory leaves are legally protected leaves under employment standards legislation. They include maternity leave, parental leave, sick leave, bereavement leave and leave for domestic violence. Employees who are on statutory leave have explicit legal protections, including a right to return to their job or a comparable position.
Non-statutory leaves may not be expressly covered under employment standards legislation, such as extended personal leaves or unpaid sabbaticals. Resultantly, employees taking non-statutory leave may not have the same legal protections as those covered under employment standards legislation. Employers must still be mindful of the factors surrounding termination. Terminating individuals on non-statutory leaves may still present liabilities if not handled appropriately.
When is Termination Unlawful
In Canada, employers cannot terminate an employee because they took a leave. However, this does not mean an employee on leave has absolute job security. Termination may be lawful if it is entirely unrelated to the leave.
Reasons for termination unrelated to leave could include business restructuring; company closures or suspensions of operations; or position elimination due to operational needs, though this is not always enough to justify a termination.
Employers must be able to demonstrate the termination decision was not influenced by the employee’s leave status. A good rule of thumb for employers is to consider whether the employee would have been terminated had they been actively working at the time the operational constraint arose.
Legal Obligations
Each province’s employment standards legislation imposes several requirements on employers: they must reinstate employees returning from statutory leave to their previous or comparable position; they cannot punish or fire an employee for taking a statutory leave; and if an employer does terminate an employee on leave for legitimate business reasons, they must still comply with the legislation’s notice and severance pay requirements. This means pay in lieu of notice if an employee is not on-site or able to work through their notice period at the time of termination.
Human Rights Considerations
Each province has its own legislation pertaining to human rights. Applicable human rights legislation provides additional protections against discrimination based on disability, pregnancy, family status and other grounds. If an employee is not on an employment standards legislation-protected leave but their leave of absence is due to a disability, family obligations or other protected grounds, terminating their employment may constitute discrimination under human rights legislation.
Under human rights legislation, employers across Canada have a duty to accommodate employees to the point of undue hardship. This means they must explore reasonable alternatives and work together with the individual before considering termination. Failure to do so can (and often does) lead to a human rights complaint.
Justifying a Termination
If an employee believes they were terminated because they took a leave, they might claim wrongful dismissal or discrimination. In these cases, courts and tribunals may assess whether the employer: made the termination decision before or after the leave started; can provide documented evidence (e-mails, performance reviews, restructuring plans) showing the termination decision was unrelated to the leave; and terminated similarly situated employees who were not on leave.
For employers, ensuring compliance with their province’s employment standards and human rights legislations is crucial to reducing liability and ensuring best practices. To mitigate legal risks, employers should document legitimate reasons for termination and ensure they are unrelated to leave; communicate openly with employees about business changes; provide notice or payment in lieu and any other requirements as mandated by law; and accommodate as needed under human rights legislation before terminating an employee on leave.
Steps for Terminating an Employee on Leave
1. Review employment contracts and policies to ensure compliance with employment standards legislation.
2. Assess alternative accommodations. If applicable, explore whether the employee can be accommodated in another role.
3. Ensure documentation is in order. Maintain clear records throughout the entire process demonstrating a legitimate business reason for termination.
4. Seek legal advice. Consulting an employment lawyer prior to making or communicating any decisions can help mitigate risks and ensure lawful termination practices.
Jessica Paglia is an employment, labour and contracts lawyer at SpringLaw, a Canadian virtual law firm advising on workplace legal issues. Jessica has experience working with both Canadian and American clients on a wide range of legal matters, including contracts, workplace safety, human rights, wrongful dismissals, and collective bargaining and workplace investigations. She can be reached at 416-238-8183 or [email protected].