Risky terminations

Ending the employer-employee relationship means navigating potential pitfalls

By Ryan Savage and Peter Mueller

Employment terminations may not only create significant liabilities to an employer, in some cases the liability comes as a complete surprise. One risk of such unexpected liability may arise when failing to appreciate the statutory protections applicable to employees who may be inadvertently violated by an employer who dismisses an employee.

 These statutory protections for employees can be easily overlooked, but are often very significant. The employer will usually be on the hook to fully compensate an employee for all losses, including the possibility of full-back pay and reinstatement. The stakes are high, so employers should proactively consider the liabilities, mitigate the risks where possible, and seek guidance from qualified human resource professionals and/or legal counsel before terminating employment. 

In the real world

Let’s explore the case of an employee who claimed to have been terminated because they were allegedly on a statutory leave of absence. We acted as legal counsel for the employer. While the complaint was dismissed, this case is a reminder of the easily missed but significant liability that an employer may face when dismissing an employee. 

In Manitoba, The Employment Standards Code (the “Code”) entitles employees to a statutory leave of absence for long-term illness or injury. To be eligible for the leave, a “physician must issue a certificate providing evidence reasonable in the circumstances that the employee is expected to be incapable of working for a period of at least two weeks because of a serious illness or injury.” The issues at hearing were whether the employee was entitled to this leave and, if so, whether the employer breached the Code by terminating the employee’s employment because the employee had taken the leave. 

An employee (AM) was issued a written warning following a respectful workplace incident. AM then asked the employer to produce all interview notes from the investigation. The employer refused and then AM provided the employer with a medical report stating that AM was, for a period of one month, not fit to attend work for medical reasons. The medical report did not provide a prognosis or an expected return to work date.

The employer granted AM a leave of absence, largely because it believed that it had no other option. At the time of the request, AM did not make any specific reference to seeking a statutory leave of absence but the employer also did not ask whether the employee was seeking one. 

Before the end of the leave, the employer met with AM to discuss the issues but, by the date of the meeting, the medical report had expired, and AM had not provided an updated medical report. During the course of the meeting, AM couldn’t confirm when a new report would be provided, but indicated an intention to seek one the following day. As a result of AM’s conduct at the meeting (and prior conduct), the employer lost trust and terminated their employment. The next day, AM secured a new medical report, which confirmed they would be fit to return to work later that same week, and sent it to the employer. The employer refused to reinstate employment and confirmed the termination. 

 AM filed a complaint with Employment Standards, alleging to have been terminated as a result of taking a statutory leave of absence. Employment Standards determined that AM was entitled to a leave of absence under the Code, based on the medical note provided. Employment Standards took the position that any report evidencing a medical need for a leave of absence of two weeks or more met the Code eligibility requirements for long-term leave for serious injury or illness. However, Employment Standards dismissed the complaint, finding the termination was totally unrelated to the leave entitlement and so not in breach of legislation. AM appealed the decision to the Manitoba Labour Board, and the matter proceeded to hearing. 

The law required AM to establish proof they were terminated while on a protected statutory leave, at which time the onus shifts to the employer to prove the reasons for termination were totally unrelated to the leave entitlement. In this case, the employer successfully argued that AM had failed to establish a statutory right to the leave of absence in the first place, such that statutory protection did not apply (and the employer did not have to prove its decision to terminate had nothing to do with the employee having taken a leave of absence under the Code). The Board noted that while the employer could have sought additional information on the nature of the leave request, there was no objective evidence to suggest that AM was seeking access to a statutory leave for long-term illness or injury. 

Take aways 

Where appropriate, employers should seek clarification on whether an employee is seeking access to a statutory leave. Employers should also seek clarification on medical information that is vague, incomplete, or inconsistent. More broadly, this case reminds us of the “hidden risks” employers may face when they terminate an employee’s employment at a time when the employee may have statutory protections. 

Statutory protections can come in the form of leave protections, prohibitions against reprisals, and prohibitions against discrimination, among others. While AM didn’t succeed on this point, it is generally straight forward for an employee to establish that they exercised a statutory right and also experienced a negative employment outcome, like a dismissal. The burden then shifts to the employer to prove a negative – i.e., the employee exercising a statutory right had nothing to do with the employer’s decision to take action against the employee. This burden, and the associated liability for failing to meet it, should encourage employers to act carefully before taking action against an employee.

The potential liability is significant, so employers should take these issues seriously. Employers should proactively consider the liabilities, mitigate the risks where possible, and seek guidance from qualified human resource professionals and/or legal counsel before terminating employment. 

Ryan Savage and Peter Mueller are members of the Labour and Employment Law Practice Group at the Winnipeg law firm, Taylor McCaffrey LLP. They focus on helping employers thrive by finding creative and proactive solutions to the challenges they face. Ryan is also the President of Boxing Canada and Director of the CPHRA-Manitoba. Peter is a Board member of the Community Respite Service. Both Ryan and Peter are members of the Employment Law Alliance and Canadian Association of Counsel to Employers.