Is the insurer allowed to tell my employer this information? I’ve been living in fear since realizing this that the company may pull a frustration of contract.
What do I do now I thought there were privacy laws on this?
Yes they are allowed. You signed documents at the start of your disabilty application that allows the insurer and employer to share information. You would of had to revoke this authorization before they told your employer that you were approved for CPP-D, but the employer would have figured it out when the regular updates stopped.
I’m of the opinion that once someone is approved for CPP-D it means your contract is frustrated. As far as I know service Canada doesn’t approved people who will be able to return to work in the foreseeable future.
Ok, so 36 years in I should expect to be let go with no severance package. Pretty upsetting. I wonder if they will at least payout my vacation and sick time, not that it would matter as insurance would claw anything back from either of those. So I guess I just wait for it to happen then. I understand where you’re coming from. I just always hoped for some reason I would make it back in some capacity with more time to heal. But so far things are just going downhill. Thus approval for CPPD. In the first place. Does not stop me from trying everything I can to get back some quality of life after my accident tho. Thank you.
Does your insurance policy specifically say banked vacation time is offsetable income? If it doesn’t specifically state that then you’re banked vacation time is yours to keep partly because you earnt it prior to going on LTD.
Depending on your province even if your employment contract is considered frustrated you’re still be owed some minimum severance. Please keep in mind many LTD policies make it clear any severance package is also offsetable.
Some provinces, like BC, do not legislate that employees terminated for frustration of contract, receive a penny. I understand Ontario requires employers to pay out minimum severance pay after five years of employment (one week per year up to eight weeks).
It’s a meagre amount. Sadly, some employees on disability leave approach their employers asking to be terminated and requesting this pay. Employers may be very willing to comply because they can then terminate health and dental benefits and ongoing contributions to pension plans, if applicable. In the interest of getting a few weeks pay, they could be giving up thousands in future benefits.
I got severance in Ontario.
You might, might not.
Mine wasn’t so yours might not be.
Have you been doing your own research on-line searching for “Ltd frustration of contract?” If so, you will find dozens of articles from law firms on the topic. You will find many social media posts saying you will be terminated after two years on LTD or three years, etc., due to Frustration of Contract by well meaning or nefarious actors. You will even find lawyers writing columns in newspapers opining on all sorts of labour law topics. Usually, their firms represent employers, not terminated employees and are trying to influence employees…(I sound like a conspiracy theorist and I just learned what that is!).
I am retired now, but was on LTD, CPPD and DTC for many years so I have “lived experience,” and I wish I didn’t have this experience. I was also an insider in the insurance industry for many years.
Initially, when I went on LTD, I consulted with a lawyer and asked him about this topic. He advised me it is possible you can be terminated for Frustration of Contract (a legal term with a very specific meaning that applies to every type of contract). I asked what the possibility was in my case, and he said he couldn’t answer that, but needed to raise the possibility with me. He really could not say anything else.
I had an opportunity to talk with the leader of a large LTD operation in Canada. He said, it does happen, but is very rare that an employee on an ongoing, approved LTD claim is terminated for Frustration of Contract. I asked are you sure? He said, absolutely, yes. We manage claims and work directly with employers and know everything going on in their business that impacts claims and risk. Good employers provide LTD to attract talent. They don’t want negative publicity by trying to terminate disabled people on legitimate, ongoing approved claims. It is very cruel.
I then searched for legal cases. I often found opinions by junior legal associates and they expressed opposite opinions on the outcome or meaning of the same case. The cases cited almost always had a twist such as, the employee was never approved for LTD or their LTD claim was terminated. The employee might have been terminated for something else such as health and dental benefit fraud, not frustration of contract at all. I did find one case where a municipality in BC cut off several employees for frustration of contract, but that was an exception. I stopped searching after a year as it was a rat hole.
So,why have I signed on after years to write this long note? Well, it is a upsetting to me that vulnerable people on disability feel terrorized by information posted on-line and think the axe is coming down on them any day. If you have an approved, ongoing LTD claim it is really unlikely you will be terminated by your employer for Frustration of Contract. Can I guarantee it? No! I am just an anonymous poster on the internet and I don’t know your contract or situation and I am not a lawyer and I don’t have a crystal ball.
I recommend you focus on your health. Follow the rules of your LTD contract. Be honest with your employer and LTD company. Don’t be naive. Understand whether you have a non-profit plan (most people do - their LTD company is simply a claims paying agent) , fully participate in rehabilitation plans, be careful about the medical information you share with others outside your medical team and family, and, most importantly, try to find some enjoyment and hope in your life.
Don’t give up. Strive to return to work. It is in your best interest, physically, mentally and financially. If you are unable to work and have very strong medical evidence for your disability claims, don’t worry about being cut off or being terminated. Year by year I did get a bit better. I never returned to work, which was devastating for me financially and personally, but I am OK now!
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Well I was after 8 years.
Employers usually do it well after the COD (usually 2 years) if at all.
The province you are in matters and the size of company.
Would it be better if there was a hard legal date that people could count on being terminated?
Eg. After 4 years on LTD, everyone gets terminated and gets severance.
I understand why the company did it to me, I cost them money and am never going back to work.
It sounds like your employer approached you with an offer and started a negotiation with you for a severance and termination agreement and a release. You also signed that you would not disclose the terms of the agreement with anyone except your advisors or perhaps your spouse/parents. If they were a smaller employer, they may have just wanted you off their employee list and were willing to pay you severance. You did talk about your severance agreement and negotiations and said you were happy about the deal. That’s great and a win-win for both of you. You considered their offer, any impact on your LTD benefits (clawbacks) and the value to you of your lost health, dental or pension benefits, if any and accepted it
In your case, it doesn’t sound like you experienced a termination by your employer under Frustration of Contract. Your employer may have been frustrated about the situation and you too were frustrated about your health and situation. A Frustration of Contract situation is a specific legal situation and I suspect it isn’t different by province or size of employer or even type of contract. When a company sends out a formal notice to an employee that their employment is terminated under Frustration of Contract, they simply terminate them. That’s it. There is no negotiation of a severance agreement. The employer doesn’t suggest you see a lawyer before accepting the offer. There is no offer for an employee to accept. The employee receives no payment or compensation at all except, in at least one province, Ontario, the employer is required to pay the statutory minimum amount which could be up to 8 weeks’ pay for an employee with 8 years of service. An employee with 1 to 4.9 years of service gets nothing. An employee with 36 years of service gets 8 weeks’ payment. This payment is due to Employment Standards legislation and not contract law and since Employment Standards Laws vary among provinces and federally, that explains these differences. The payment, if any, goes out automatically to the employee and health, dental and pension contributions continue during this period if allowed by the insurer.
No, I don’t think it would not be good for legislators to spell out a specific timeframe after which an employee can be fired under Frustration of Contract law. Setting a timeframe isn’t possible, as each situation is very different.
My intention in responding to Tazz was to rebuff many of the opinions or advice/comments or articles he may have read on the topic… Tazz exclaimed something like “you mean after 36 Years they can just terminate me and I get zero severance under Frustration of Contract?” He/she understands what Frustration of Contract law is, how specific it is and that it means, essentially, zero payments. Each party walks away. If he lives in Ontario he would get 8 weeks’ pay under Employment Standards law, but even that could be clawed back by his LTD plan.
It is uncommon for an employer to terminate employees on an approved, ongoing LTD claim under Frustration of Contract and these cases are difficult for employers to win in court. It does happen, but the cases are few. The employers who try, lose big time in the court of public opinion and even more so with their current employees. . The cases may very well be increasing especially with the influence of the US.
Jammer, my guess is your severance agreement was for a minimum of 12 months’ pay. I don’t know you, or where you worked or what your occupation was, but an employer offering a termination and severance to a person on an approved, long term disability claim needs to pay to be fair to the employee.
Jammer, I don’t expect to convince you, but I have done my best today and in the past using my experience and knowledge as a layperson (Not a lawyer). My intention is really to help Tazz and people like him . I am simplying offering a different opinion.
Thank you much appreciated.
I would really like to improve over time and return. For financial reasons.
I will continue to focus and In the end it will benefit my quality of life even if I cannot return. I will know I have tried my best to do so.
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In the Facebook disability support group I am currently in there are 10 of us who are having/had their employment ended under the doctrine of frustration. 8 are in Alberta with zero severance, 1 Nova Scotia, and another in Ontario. 5 of the Albertans have sought legal help but none of the employment lawyers spoken too felt these cases were worth taking. The other 2 non Albertans found employment lawyers willing to write “stern” letters on their clients behalf that fell on deaf ears, and the employment lawyers weren’t willing to take things any further.
In Alberta, AHS (Alberta Healthcare, one of Alberta largest employers) policy is to let people go at the two year mark on LTD if a return to work is not possible. No severance is offered, and it wouldn’t matter, as Canada Life’s LTD policy contract with AHS grants them the right to offset 100% of severance and termination payments. No lawyer so far has been willing to take on AHS. I am specifically to talking about unionized AHS employees (which is most of them, I do believe).
As a person who worked in HR previously I was involved in one employee being let go once the employee qualified for CPP-D using Frustration of contract. We paid 8 weeks of minimum severance for a 10 year employee. I fought as hard as I could to get them more, but was over ruled. I then left that company.
Maybe it’s Karma; but I now personally am going through this with my employer (a massive US stock exhange traded company that has 1000s of employees in Canada) has informed me that my employment contract will end due to Frustration of Contract, with zero severance. I just reply asking for an extension of medical leave and they so far keep granting one.
I haven’t discussed it with Resolute yet, but two other major law firms specializing in disability/employment have said “sorry we can’t help you” after reviewing the complete file. They both said you’ll likely get approved for CPP-D so at that point we can’t do much for you as the government has deemed there is no feasible return to work reasonably expected in the foreseeable future. They did say they are willing to reevaluate if CPP-D denies me (like others I am still waiting for the medical adjudicator to make their final decision). My stance is and will continue to be to keep asking for medical leave extensions in hopes they don’t want the bad publicity…they know I can be a bit of a bull in a china shop.
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Thanks for your comments. I agree with everything you say.
My main point is in a frustration of contract termination the employee gets ZERO unless he lives in a province or is covered by federal legislation where he might be is entitled to meagre, minimum statutory pay. Of all the employees on LTD in Canada, this happens very rarely.
Quite a few employees in some sectors are terminated from their employment while on a continuing LTD claim. It is a known and planned “feature” of the overall plan in many of these cases. But even this situation, is not common and these people receive good compensation and may receive ongoing benefits under retiree plans.
There are a few nuances:
AHS employees are mostly in a union. The employment policies are carefully documented in the union contract or elsewhere. This includes LTD and any termination rules, severance, bumping, etc.
Lawyers rarely touch grievances or employment issues for unionized employees because they usually, not always, have no role they can play. The lawyers need to review the documents before they will tell you whether they can help. The union represents the employee, and where the union agrees there is an issue, they will assign a union lawyer to the case. Sometimes there is no issue, as the employer is following the contract.
I will give a common example related to LTD in a large unionized environment. People often encourage friends “wrongly” cut off from a union LTD plan to “sue, sue, sue.” The reality is you usually, but not always, can’t sue. You go through an escalation process to challenge your denial to a panel of physicians. It is all laid out in the contract.
Unionized terminations are usually carefully documented in contracts & policies and agreed to by the union. Private lawyers usually won’t get involved because they can’t sue or impact anything in many cases. Disabled, unionized employees usually don’t have much money to fight the union and employer. The sad thing to me is that unions are not up front with terminated members. They prefer to make it look like it is the employer’s fault when it is the union who negotiated the contract and it is being followed.
I haven’t looked at AHS’ contracts, so I’m guessing a bit. I am curious and may do some research. Alberta is the Texas of the north. They keep reorganizing healthcare and firing lots of people. They have apparently “ripped up” contracts with doctors and others (not sure what that means). Many employers with a mandatory termination after a period, or where the employee will not return to work in the foreseeable future, don’t really cut the employees loose completely. For example, The Federal Government will hold the job for a couple of years and then, if the employee is not expected to return to work, they “terminate” them and they switch to medical retirement. This is not the most horrible situation. The employee receives LTD, a medical retirement pension which is not reduced for “early retirement” and, continues to receive Cadillac (Tesla?) health, dental and even an out-of-country medical plan with no pre-existing conditions or stability clauses. The LTD and medical retirement pensions are fully indexed to inflation. In this specific case, I believe the pension/bridge benefit is reduced by CPPD benefits as clearly laid out in Federal legislation. The LTD is reduced by the amount of the medical pension. It is a much more generous package than most people receive, however, they are terminated from employment and they don’t receive any severance to my knowledge unless, perhaps it is in the contracts. A “permanently” disabled employee cares about retaining their benefits and their pension and these folks are mostly covered off. I believe Ontario Health workers have a similar arrangement as do Ontario teachers. I am sure I have some details wrong, but I believe I understand the overall scenario.
Branch Plants of US Companies
I did mention the US influence for a reason….
The environment in most US states is very different than in Canada. It is very, very different! Mostly, employees have fewer rights than Canadians, but occasionally they have more.
US corporations inflict things on Canadian HR and employees and refuse to acknowledge that Canadian laws and practices are different. My spouse, a professional and senior manager, in a Canadian branch was “laid off” by a huge US company. He got zero at layoff time and they stopped paying for his benefits. He went on EI which is actually clawed back if you have a high income. Temporary layoff is a common and legitimate practice in some unions and some hourly paid employees. His contract didn’t allow this and it isn’t allowed in Canada for his type of occupation. We couldn’t afford the stress and money to fight it. Months later they made the layoff permanent and he received his severance. We did not live day to day, but had no expectation this could ever happen, but it did and this was long before COVID.
Here’s something to consider. You belong to a Facebook group where aggrieved or worried disabled employees participate. It represents a very specific segment of a large population. That’s true for things you read in the paper or see on tv. These are exceptional circumstances. Most people who go on LTD, CPPD and DTC sail along smoothly and receive the benefits they are entitled and retain there employment until their LTD ends. Lawyers never see this population and this population doesn’t post about their satisfactory experiences
You need to be very aware and not naive. Bad things can happen and insurance companies can be unfair and cruel and so can employers. Your previous experience terminating a disabled employee is sad and it impacted you so much that you were uncomfortable and moved on at some point. As an HR professional you could not discuss this with people so it hurt even more. This is why most companies never even try do this even though they may have the right to do it in some situations (terminate employees on an approved LTD claim under Frustration of Contract meaning zero compensation).
You are absolutely correct and experienced in continuing to ask for extended medical leave. I never did this, because they never asked me. They were in regular contact my LTD insurer.
I will tell one story, however. A couple of years into my disability, I was introduced to the new HR executive at a non-work related social event. He knew who I was from my name. He wasn’t really into the usual social chit chat. He directly asked me “so are you ever returning to work?” I knew why he might be asking, and where he might go with my answer. I answered “Yes. I am working hard on my recovery and plan to return!” At that point, my answer was sincere and true. I did have doubts about my ability to return to work as the years went on, but I knew better than to casually discuss this or my medical information or prognosis with him or anyone except my doctor and immediate family. CPPD does not mean you will never return to work. Lots of people return to work after a time on CPPD. A few companies use the fact somebody is on CPPD as evidence to terminate their employment, but it isn’t commonplace.
Sorry for the rambling. It is hard for me to write clearly and concisely these days. Writing a good note would take hours!
Sincerely,
A retired insurance and financial services executive.
I wish someone had stats on how many employment contracts terminate on frustration during disabilty at CPP-D approval. I was under the impression it is significant purely based on personal experience.
Our facebook disability support group is small and we’ve all met in person. 33 individuals from across Canada brought together for a mountain retreat by our pain management clinic shortly after the pandemic restrictions were lifted in BC. About half the group has been approved for CPP-D and almost a third of us have faced frustration of contract (with statutory minimum or zero severance) within the last 18 months all triggered at the approval of CPPD. So that’s why I thought it was common. So far I am the only one who has been able to keep pushing it out, but I am also the only one of ten who hasn’t been approved for CPP-D yet. We all come from a wide swath of employers from very small, huge, private, public, purely Canadian, wordwide operations, and we are mostly non union.
There are no statistics available to my knowledge.
The largest insurance companies know, but probably don’t care that much, as it probably doesn’t impact them. They know, because severance is almost fully deducted from LTD payments. They are advised when claimants are terminated, resign or retire. They have specialized team members who do all the calculations for offsets.
Half of your group are unionized from a single employer. My guess is they were terminated, but moved onto a medical pension with retiree benefits. I could be wrong, however, as Alberta these days seems to be in a war against healthcare workers and AHS. The losses for “permanently” disabled Ltd members is loss of benefits and pension. They may not have lost these things so it may not be the same as your previous experience as an hr manager.
This is a very complex subject which leaves almost everyone very confused as nobody has the full picture and the details matter. David wrote an excellent article trying to explain, and you read it and quoted from it. Most people even reading that article cannot relate the salient points to their situation. Each situation requires detailed review by an expert lawyer.
I will try to send you a private note. I don’t think my emails within the site work though.
It was the legal minimum in Ontario and I am happy with it.
Jammer,
You could be much further ahead than staying employed. If you were not worried about returning to work because you couldn’t anyway, you may be much further ahead. If you had no ongoing employer pension benefit, you didn’t lose it. Your employer health and dental plan might have been much worse than the Ontario Trillium drug plan and Federal dental benefit. If your LTD is non taxable, it doesn’t count as household income in determining thresholds for the Federal Dental plan and Trillium. You are now eligible for both public benefits perhaps at the maximum level, especially if you have a low taxable net income.
So, hopefully a win-win-win! Each case is different and the devil is always in the details.
Sorry, I may of not been clear. I’ll attempt to explain better.
About half our support group has been approved for CPP-D. Of those on CPP-D nine (9) of them have had their employment terminated by frustration of contract with either minimum statutory severance or zero severance in the last 18 months. All nine are are from different employers from across Canada and only one of the nine was in a union. For all nine, extended health benefits ended with their employment termination.