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The HR Space | Bulletin | Covid-19

Restructuring in a Pandemic: No Automatic Job Protection For Medical Leaves

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Labour, Employment and Human Rights Bulletin | The HR Space

As the COVID-19 global pandemic continues to impact Canadian employers, many workplaces are contemplating corporate restructurings and staff reductions. In reducing their headcount, some employers may be faced with the difficult decision of terminating employees on medical leaves. While many employers shy away from terminating employees on leave due to potential human rights implications, employers may simply not have the capacity to retain these employees. Can employers terminate employees who are on a medical leave during a corporate restructuring without human rights liability? The Canadian Human Rights Tribunal (the "Tribunal") considered the question in O'Grady v. Bell Canada.

What Happened?

The employee suffered from a mental illness and alleged that her employer had discriminated against her in terminating her employment without cause in the course of a restructuring.

A Web Specialist with 19 years of service, the employee was on a disability leave and had qualified for short-term and long-term disability benefits. The employee was in the process of finalizing her return to work plan, which was to include a gradual return to work, when the employer informed her that her employment was terminated on a without cause basis as part of the employer's "re-organizational" plan. The employer had eliminated 2,500 positions in the course of this restructuring. As a result of her termination, the employee was no longer eligible to receive long-term disability benefits.

The employee alleged that the employer had discriminated against her by terminating her employment, arguing that her dismissal was, at least in part, due to her mental health issues and subsequent benefits payments. The employee further argued that the employer had failed in its duty to accommodate her by denying her long-term disability benefits. The employer, on the other hand, claimed that the employee's termination was purely a result of the company-wide downsizing.

What Did the Tribunal Find?

The Tribunal decided that the employer had not discriminated against the employee. This was because the employee could not show that the termination was connected to her disability. The fact that she was on disability leave was not enough.  The employee had to prove a prima facie case of discrimination, that is, to show that her termination was connected to her disability. The employee was unable to muster any concrete evidence beyond her personal perception and belief. There was no evidence that the individuals involved in the decision to terminate even had knowledge of her particular medical condition, which was managed by a third party. In other words, disability or not, the employee’s position would have been eliminated in any event.

In addressing the allegations of the employer's failure to accommodate, the Tribunal noted that the duty to accommodate does "not require an employer to maintain an existing position for an employee [on leave] while it underdoes reorganization." The Tribunal went further to state, "a restructuring employer may even replace the employee, so long as its decision is untainted by discriminatory considerations."

What Does This Mean For Employers?

This case is an important reminder for employers. The fact that an employee is on a disability or medical leave does not automatically mean employment cannot be terminated without cause in a legitimate reduction in force, provided that disability or another protected ground is not a factor in the termination. An employee’s perception or belief that they were selected for termination for discriminatory reasons will not be enough to establish a prima facie case of discrimination and expose the employer to human rights liability.

As with all potential human rights issues, employers should tread carefully. Employers need to be able to show their termination decision are not tainted by improper considerations. Documentary evidence in that regard will help immensely in rebutting any claim that a termination of this nature is discriminatory. Terminating employees on medical leaves because of workplace injuries, however, may attract other legal considerations and employers should seek legal advice in that regard.

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