Employee on Sick Leave Entitled to Salary During Notice Period

In a recent case from the Divisional Court, McLeod v. 1274458, the Court recently upheld the Superior Court’s decision on the issue of whether an employer is entitled to give working notice (rather than pay in lieu of notice) to an employee who is incapable of working for medical reasons.

The case involved an employee who had been employed for a period of approximately 17 years. On September 15, 2015, the employee was involved in a non-work related motor vehicle accident. He was placed on an unpaid medical leave of absence.  He did not collect any disability benefits during his absence. On January 31, 2016, while on his leave of absence, the employer sent him notice of termination confirming that as of July 31, 2016, its operations were going to cease. He ultimately returned to work on two occasions for a few hours at the end of July just before the employer ceased its operations. The employee secured alternative employment as of October 31, 2016.

The employee commenced a wrongful dismissal lawsuit. He sought payment for salary between January 31, 2016 and October 31, 2016. The employer argued that he had not suffered any damages because the employee could not work until the end of July 2016, and that he had been provided adequate notice of termination. The Court rejected this argument stating that because he was incapable of working he was entitled to damages representing salary that he would have earned during the nine-month period from January 31, 2016 (notice of termination) to October 31, 2016 (new job).  On appeal to the Divisional Court, the Divisional Court agreed and upheld the decision of the lower court.

For employers, it is important to recognize that working notice is only given to those employees who are capable of working. Attempting to provide working notice to an individual who is incapable of working will not be sufficient to reduce the reasonable notice period available to an employee. An important fact in this case is that the worker had not collected any disability payments and therefore, the issue of whether disability payments ought to have been deducted from any damages for wrongful dismissal was not applicable.