Denial of Disability Benefits Does Not Mean an Employee is Fit to Return to Work

  • June 01, 2019
  • Anita K. Atwal

An employee’s medical leave triggers a new set of obligations for both the employer and the employee. In cases where the employee is approved for disability benefits by a disability insurer, the landscape is easier to navigate. However, in cases where the insurer has denied disability benefits, employers must be careful not to confuse the insurer’s denial of benefits with an employee’s fitness to return to work.

Treating an employee’s failure to return to work after a denial of disability benefits as unauthorized absenteeism exposes the employer to a significant claim for damages, especially when the employee is still within the appeal period for benefits.

In Bailey v. Service Corporation International (Canada) ULC, 2018 BCSC 235, the employee was denied disability benefits and was in the process of appeal. The employer alleged cause on the basis that the employee abandoned his employment. The employer failed to ask the employee for a medical certificate regarding clearing his return to work. The court held that the employer had no cause for dismissal and awarded the employee $25,000 in aggravated damages and $110,000 in punitive damages.

Similarly, in Zorn-Smith v. Bank of Montreal, [2003] OTC 1060, the employee advised her employer that she could not return to work for medical reasons after her claim for disability benefits was denied. The employer took the position that the employee had either resigned her position or, it had cause to terminate her employment for abandonment. The court held the employee was wrongfully dismissed and awarded 16 months’ pay in lieu of notice. The court also held that advising the employee while she was on medical leave that her employment would be terminated unless she returned to work against her doctor’s advice was bad faith conduct on the part of the employer.

Important lessons emerge for both employers and employees about their respective obligations when an employee is denied disability benefits but the employee is not well enough to return to work.

Lessons for Employers

If disability benefits are denied, ask for a medical certificate from the employee’s doctor with respect to the employee’s ability to perform their job duties and whether any accommodation is required to facilitate the employee’s return to work.

Do not treat the employee’s failure to appeal the denial of disability benefits as an indication that the employee is well enough to return to work.

Requiring an employee to attend work when the medical information does not clearly support a return to work may breach the employer’s obligations under the Human Rights Code.

If the medical information does not support a leave from work, provide the employee with a clear warning about the consequences of not returning to work. The employee will have an opportunity to respond with medical information that may not be known to the employer and it gives the employer an opportunity to consider new information before making a termination decision that can have a devastating impact on a sick employee.

Lessons for Employees

Employees must communicate with their employers about their fitness to return to work.

Employees should not confuse communications with the disability insurer or disability management company as communications with their employer.

It is in the employee’s best interest to provide the employer with timely information from their doctor regarding the restrictions and limitations that prevent a return to work.


Anita K. Atwal is a lawyer practising at HHBG Lawyers – Surrey. She represents employees in employment and human rights matters. linkedin.com/in/anita-atwal-38175b16