Compensation benefits

Risks of dismissing a worker
By Daniel Mayer

Dismissing a worker who is receiving loss of earnings (“LOE”) benefits from the Workplace Safety and Insurance Board (“WSIB”) is fraught with risk. An employer might have just cause to terminate the worker’s employment, and might believe that LOE benefits will cease after termination, but there is debate at the Workplace Safety and Insurance Tribunal (“WSIAT”) regarding whether a worker should continue receiving LOE benefits after his or her employment is terminated for just cause. Employers need to take this into consideration when dismissing a worker.

Under the Workplace Safety and Insurance Act (“WSIA”), LOE benefits are granted to workers when they suffer a work-related injury and suffer a loss of earnings as a result. For example, an employee might only return to modified hours after the injury. LOE benefits are meant to compensate a worker for his or her loss of earnings in these circumstances.

Misconduct

An interesting issue arises when a worker is receiving LOE benefits and is then dismissed for some sort of misconduct. Will the WSIB continue paying LOE benefits? The WSIB has not developed any policy on LOE benefits in the case of terminations for just cause. The WSIAT decisions discussed below will demonstrate the differing approaches that have emerged.

The first line of decisions states that LOE benefits cease after a termination for just cause when the actions that led to the termination amount to repudiation or a fundamental breach of the employment contract. In other words, the worker’s behaviour led to a breakdown in the employment relationship. This conduct usually involves the most condemnable workplace behaviour, conduct that is incompatible with the worker’s duties.

When repudiation or a fundamental breach occurs, the link between the LOE benefits and the injury is broken because the worker’s loss of earnings now stems from the loss of employment due to the misconduct. It is not the WSIB’s role to compensate workers for the loss of earnings arising from their dismissal.

Misfeasance allowed

In Decision 690/07, the worker was dismissed for violating company rules and policies two weeks after he injured his back at work. He claimed LOE benefits from the date of termination until he started his new employment. The WSIAT ruled that the worker’s misfeasance could have been addressed short of termination.

Therefore, violating company policy in this case was not a fundamental breach of the employment contract. LOE benefits were granted from the date of termination until he was medically cleared to seek employment at no wage loss, a time period of approximately five months.

The reasoning in Decision 690/07 was premised on the fact that there was no authority (in the WSIA or otherwise) to consider a termination for cause differently from a termination for economic reasons, such as a permanent layoff. In fact, the WSIAT stated that there was no qualitative difference between termination for just cause and termination for economic reasons.

The WSIB has developed policies to determine entitlements to LOE benefits when a worker is dismissed for economic reasons. In short, when a worker is dismissed for economic reasons, and continues to suffer from a disability due to a workplace injury, the worker may qualify for additional LOE benefits.

In the case of a termination for just cause, the events surrounding the worker’s dismissal are only relevant if they sever the link between the compensable injury and the LOE benefits, such as repudiation or a fundamental breach of the employment contract. In other words, a worker’s dismissal that is unrelated to his or her compensable injury is not automatically an intervening event that ends the worker’s LOE benefits.

Obscenities overlooked

Decision 690/07 was subsequently followed, such as in Decision No. 190/10. There, the worker was suffering from subclavian vein thrombosis. He was dismissed for aggressively yelling obscenities and derogatory remarks at his supervisor. The WSIAT was not persuaded that the worker’s conduct amounted to repudiation or a fundamental breach of his employment contract. Thus, he was granted LOE benefits from the moment of termination until he found new employment, a period of time of approximately seven months.

In more recent cases, the WSIAT has moved toward an approach that considers first and foremost whether the worker’s dismissal was related to the compensable injury. The dismissal will be considered an “intervening event” if it is not related to the injury. Whether the misconduct was a fundamental breach of the employment contract is not at the centre of the analysis. This approach is more in line with the WSIA. Section 43 of the WSIA states that a worker receives LOE benefits when he or she suffers a loss of earnings resulting from a work-related injury. As such, loss of earnings from termination for just cause is not a result of a work-related injury and benefits should be denied.

Dealing with a thief

In Decision No. 2193/11, the worker was dismissed for stealing a battery. He was suffering from a right hip strain and right shoulder strain. The WSIAT found that the compensable injury was not a factor in the termination of the worker’s employment. The WSIAT made this determination because the employer could have continued to accommodate the worker. Having made this determination, there was no need to determine if the worker was dismissed for just cause. In fact, the WSIAT stressed that it was not within its scope of authority to import common law notions of wrongful dismissal, such as just cause, when adjudicating claims for LOE benefits.

These decisions from the WSIAT make it difficult to determine whether a worker will receive LOE benefits after a termination for just cause. As we can see from the decisions reviewed, a worker might or might not continue to receive LOE benefits after termination for violating a company policy.  The lack of clarity on LOE benefits following a termination for just cause is due, in part, to the lack of any WSIB policy on the subject matter.

Daniel Mayer practices labour and employment law at Heenan Blaikie LLP (Toronto). He can be reached at dmayer@heenan.ca.

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