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Can’t Have Your Cake and Eat it Too: No Wrongful Dismissal Damages if Disability Benefits Paid
Workwise Newsletter

In Belanger v Western Ventilation Products Ltd, 2019 ABQB 571, a Master of the Alberta Court of Queen’s Bench found that an employee who became disabled after his notice of termination was not entitled to wrongful dismissal damages because the employee received disability payments during his notice period. The employee was not entitled to double compensation of both disability payments and earnings.

At the time of his termination, the employee was approximately 62 years old and had worked for the employer for 43 years. In either March or May of 2017, the employee was given approximately one year of working notice. The employee was also provided with continued benefits for at least two years. In the majority of cases, any dispute between the employee and the employer would focus on whether one year of notice was adequate notice. However, this case was somewhat unique.

Both parties agreed, given the employee’s long service and his senior position, that he was entitled to 24 months of notice. Notwithstanding this agreement, the parties disagreed on the damages the employee was actually entitled to. The issue was that the employee had become ill and unable to work in late March 2017. He began receiving disability benefits in July of the same year, and by December, was deemed totally disabled and unable to work by the disability insurer. The employee would not be able to work until his 65th birthday. The parties disagreed as to what impact this had on the employee’s damages.

The Master started with the foundational principle that, if an appropriate notice period is not given, employees should be placed in the same position they would have been in but for the termination without proper notice. An employee is presumptively entitled to damages for all amounts they would have received over the proper notice period, based on the assumption they would have worked during the notice period notwithstanding they may have been prevented from working.  

In the case before the Master, the employee had been given one years’ working notice and became disabled during this period. Since his benefits were continued, he was able to receive disability payments. These were the only payments the employee would have received due to his inability to work even if he had not been terminated. The Master found that this is exactly the same situation another employee would have been in if they were not terminated.

The Master noted that the contractual right to damages for wrongful dismissal and the contractual right to disability benefits are based on opposite assumptions about an employee’s ability to work. It would be incompatible with the contract for an employee to receive both since damages are based on the premise that an employee would work during the notice period while disability payments are only payable because an employee cannot work. The Master found that while subsequent events could not impact the proper notice period, they could impact the damages owed during the period. Damages should not be paid based on the assumption that an employee would have worked when an employee actually received disability benefits solely because they could not work.

Utilizing the principle that an “employee should be put in the same position” they would have been in but for the termination, the Master found the employee was only entitled to his disability benefits, which he received, and no further damages. Even though the initial working notice was insufficient and should have been 24 months, it allowed the disability benefits to remain and the employee was put in the same position he would have been in but for the termination without proper notice. Any additional wrongful dismissal damages would result in the employee being compensated for lost wages he would not have received.

It is important to note that the employee was able to access his disability benefits during the working notice period and throughout his time of disability. If the employee had not been able to access his benefits, the employer may have been responsible for stepping into the shoes of the insurer and for providing disability benefits up to the employee’s retirement. If benefits are not provided because of termination, the employee is prevented from being put in the same position they would have been in but for the termination without proper notice and the employer can become responsible for making the employee whole. This creates some risk when addressing the termination of older employees or those with past medical issues.

This case is an example of an employer successfully mitigating its risk and eliminating future liability. The lawyers in Field Law’s Labour + Employment Group are experienced in these areas and are able to assist when termination is considered.