Termination of employee on job-protected leave

Cuts made while employee is away
By Meghan McCreary
|Canadian Employment Law Today|Last Updated: 07/06/2016

Question: If an employer has to cut the job of an employee who is on a job-protected leave due to unavoidable financial reasons, how should it proceed to avoid liability?

Answer: Employers are entitled to eliminate positions due to bona fide business reasons — even positions held by employees who are on leaves protected by employment standards legislation, such as maternity leave and compassionate care leave. It is critical, however, that the employer is able to prove that the elimination of the position is for a bona fide reason, such as an economic downturn, and not for any reason related to the fact that the employee is on a protected leave. If an employee brings a complaint that the elimination of her position was discriminatory, in many provinces the onus is on the employer to show there was no discriminatory reason for the dismissal. It is therefore essential that before a position is eliminated, the employer ensures it can identify and produce the business records which demonstrate the financial need for the decision to abolish a job.

A job that is eliminated due to a financial downturn is still a dismissal without cause under employment standards legislation and the common law. As such, an employer is required to provide notice of termination or pay in lieu of notice. For employees who are on a statutory protected leave, such as parental leave or compassionate care leave, notice of termination cannot run concurrently with the job-protected leave. Practically speaking, this means the employee must be allowed to complete his leave and pay in lieu of notice must be provided at the conclusion of the leave, assuming that the job was abolished during the leave. A best practice for employers who need to eliminate the job of an employee on a protected leave is to advise the employee as soon as possible to give him a fair opportunity to consider new job opportunities while on leave. At the same time, advise the employee that he will be provided with pay in lieu of notice at the conclusion of her leave (again, assuming the job is abolished before her leave ends). While employees are entitled to minimum statutory pay in lieu of notice upon their termination, they may also be entitled to additional pay in lieu of notice under the common law. In such cases, I recommend obtaining a general release for any severance paid in excess of the statutory minimum. The release is best executed by the employee at the conclusion of the statutory protected leave.