Employee disability insurance and termination

Employee disability insurance and terminationWhen it comes to terminating an employee, the termination of that employee’s benefits program can be much more complicated than the termination itself.

Many employers don’t realize that when an employee is terminated without cause, the employee’s access to disability benefits doesn’t necessarily end on the same day as the termination. The benefits may end on the employee’s last day of employment, at the end of the statutory notice period, or at the end of the common law or contractual notice period.

As well, disability insurance may only cover a portion of the notice period. This means that if an employee is terminated and becomes ill during the notice period, and the insurance period has expired, the employer may still be responsible for benefits.

Such a gap could potentially lead to significant costs for the employer. There have been several cases of employees developing long-term illnesses during the notice period that leave them unable to work – and employers obligated to pay.  As such, it’s a good idea for employers to note what the insurance period is before terminating an employee.