Howard Levitt: Companies can be on the hook for huge LTD payments if they fire employees without care

Is an employee entitled to long-term disability benefits even after being fired? In most cases, yes, but the party responsible for paying those benefits will be a surprise to many.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300A welcome email is on its way.

If a terminated employee becomes disabled while LTD benefits are still active, the insurer foots the bill for the benefits. After this short initial statutory period, if the employee becomes disabled during the potentially much longer reasonable notice period of up to more than two years when they are no longer being covered for LTD — the employer is responsible — despite not often being able to purchase LTD insurance for its employees for that period.

Four months after his termination, Pasap suffered a heart attack requiring immediate surgery. The court found that Pasap would have qualified for long-term disability benefits had he been provided with working notice. Since the employer discontinued LTD benefits prematurely, it effectively stood in the shoes of the LTD insurer. Justice McMurtry ordered the casino to pay Pasap over $1 million in LTD benefits.

When employers cut off LTD benefits prematurely, they are not afforded the same remedies as insurance companies. When an employee succeeds against an LTD insurer after a denial of benefits, courts normally award pay up to the date of trial and put the employee back on the LTD policy indefinitely until they recover or reach age 65. The insurer can then assess whether the employee continues to be disabled, especially since some employees get better with appropriate treatment and time.

But when employees succeed against their employers for LTD benefits, putting the employee back on the policy is not an option because employers are not insurance companies. Rather, employers are left holding the heavy bag of benefits payments to age 65, as though the employee would be disabled for the entirety of the policy.Article content

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