Case In Point
Employees on LTD Not Automatically Entitled to Continued Employment for Purposes of Maintaining Group Benefits Coverage
Date: July 31, 2017
In a recent decision, Corporation of the Township of Langley v. Canada Union of Public Employees, Local 403, the British Columbia Labour Relations Board set aside and ordered the reconsideration of an arbitration decision in which the Arbitrator had ruled that terminations of several employees on long-term disability (LTD) was discriminatory.
Each of the terminated LTD employees had been off work for lengthy periods of time, and while on LTD they were continuing to receive group life, dental and health benefits (Other Group Benefits), the cost of which was being borne mainly by the Township of Langley (Township). The Township had reviewed the status of twelve employees who were on LTD and subsequently gave the Union notice that it would be terminating four who had been on LTD for the longest period. The Township determined that the four employees were not expected to return to work, and that this therefore justified the terminations on the basis of innocent absenteeism. However, after discussing further with the Union, the Township proceeded with terminating the employment of just three of those four employees who had been on LTD the longest (Terminated Employees). The terminations had no impact on the Terminated Employees’ entitlements to LTD benefits, but entitlement to Other Group Benefits required ongoing employment and so coverage for the Other Group Benefits was ended.
While the Arbitrator had concluded that the Terminated Employees had no contractual right to the Other Group Benefits, and that the duty to accommodate had been met, the Arbitrator held that the Township had discriminated against the Terminated Employees on the basis of disability, contrary to the Human Rights Code (British Columbia). Specifically, the Arbitrator ruled that the terminations had been arbitrary and in bad faith, and that there was no bona fide occupational requirement which would justify the discriminatory nature of the Township’s terminations. Accordingly, the Arbitrator had ordered that the Terminated Employees be reinstated.
In ordering that the Arbitrator’s award be set aside and reconsidered, the Labour Relations Board noted the undisputed evidence that the Township had moved forward with the terminations based on the duration that the Terminated Employees had been away from work, which was the longest out of all the employees on LTD. The Labour Relations Board reasoned that this focus on the length of absence from work could not be characterized as being arbitrary or in bad faith. It was also not bad faith (and not discriminatory) for the Township to terminate if the termination had been influenced by cost considerations relating to future coverage for Other Group Benefits.
Also, the Labour Relations Board cited with approval various other cases which have held that there is no general right to receive non-disability benefits simply because an employee is on LTD. In the absence of specific contractual language that ousts that general rule, the right to non-disability benefits depends not on past service but on an employee’s present ability (or reasonably foreseeable future ability) to fulfil the bargain of work for pay, which is essential term of the employment relationship.
This decision is helpful for employers, as it confirms that employees on LTD do not have an automatic right to continued employment for the sole purpose of maintaining other employer-provided benefits coverage. Nonetheless, as always, the termination of an employee on LTD requires careful consideration, and an employer will first want to evaluate an employee’s prospect for recovery and return to work, as well as opportunities for accommodation, requiring a very individualized assessment.