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Fired while Ill?

Fired While Ill | man in a hospital gown trying to walk with a walker

Fired while Ill? | Authors: Bram Lecker & Simon Pelsmakher


For most of us, a secure job is one of the most important pillars in our life. It is a mainstay to financial security. Our employment laws are written with a general understanding that employers proceed with utmost caution when they fire an employee. While your employer can fire you for whatever reason they deem fit, the reason cannot be discriminatory.  Disability is one such area of discrimination. Unfortunately, individuals fired while ill and receiving Short Term Disability or Long Term Disability benefits seek our help more often than people realize.

Employer’s Perspective

If your employer fires you while you are receiving disability benefits, the law allows them to reduce their termination obligation in two ways.  First, the law prevents double dipping. Your employer is not obliged to pay you for the termination and continue to fund your disability benefits.  Secondly, following a termination, the law requires employees to actively look for employment to reduce the employer’s liability.  This is known as the employee’s duty to mitigate. Job junting may be the last thing a individual, fired while ill, is capable of doing.  Yet, a surprising number of employers will jump at the opportunity and take advantage of mitigation failure to reduce their termination obligations.

Fortunately, exceptions exist to the rules, as illustrated in the following cases.

Sills v. Children’s Aid Society

Over two decades ago, Children’s Aid Society terminated Mary-Anne Sills. She was a 38 year old office manager let go after 16 years of service. They offered her 17.9 months working termination notice. Two months into this working notice, Ms. Sills suffered a depression. It prevented her from working for the remainder of her notice period. She went on leave with disability benefits.

Shortly thereafter, she sued her employer for wrongful dismissal. They wanted to offset the termination pay with her disability benefits. However, the court ruled that Ms. Sills had not signed a contract which expressly prevented her from collecting disability benefits simultaneously with termination pay.  Consequently, her employer remained on the hook for it.

Other courts have ruled similarly, but for different reasons. If you pay for employer sponsored disability plans through payroll deductions, you are purchasing a benefit for wage protection. Disability benefits, in this case, are completely unrelated to termination pay.

Children’s Aid Society also argued that, because Ms. Sills did not continue working through the notice period, they deserved a discount on the termination pay. The court recognized that Ms. Sills’ position was still intact. She could have mitigated the damages had she been healthy. But her disability completely prevented her from working, even on a temporary basis. The judge shut down her employer’s line of attack, here too and awarded her 19.4 months of loss of income notice without deducting amounts for the LTD benefits she had received.

Altman v. Steve’s Music

In a similar case, 59 year old Shelly Altman, had worked for Steve’s Music Store for more than three decades. In December 2007, she was unfortunately stricken with lung cancer. The treatment caused Ms. Altman to miss work from time-to-time. Eventually her illness became so severe that she commenced disability leave.

Shockingly, rather than accommodating this employee’s illness, Ms. Altman was fired while ill on April 7, 2009.  When she sued for wrongful dismissal, they used similar arguments as in Sills case, described above.

Once again, the court ruled in favour of the employee, noting that Ms. Altman had not signed any contract preventing her from collecting disability benefits along with termination pay. Furthermore, the court stipulated that the disability benefits were being paid by the insurer. They were unrelated to the employer’s obligations and the employee’s right to receive termination pay.

The Mitigation Argument

From there, the employer tried to argue mitigation. While they recognized that Ms. Altman’s illness prevented her from working, they maintained that if her health improved, they required her to mitigate the damages by seeking alternative employment. To succeed on this point, the court put the burden of proof squarely on the employer.

“Steve’s bears the onus of demonstrating that Ms. Altman failed to make reasonable efforts to find work, and that she could have found an alternative position had she taken reasonable steps.”

Steve’s was unable to furnish concrete proof of mitigation failure. Consequently, the court found Ms. Altman wrongfully dismissed. In addition to awarding her 22 months of termination pay, they slapped a fine for damages in excess of $50,000 against Steve’s.

Protection for Employees who are Fired While Ill

Illness and disability may cause you to take time off from work. During this time, you will be particularly vulnerable. Canadian laws recognize this and require your employer to accommodate your illness or disability when you return to work. Sadly, some employers act shortsightedly in such circumstances. Pegging you as “damaged goods”, they may try to frustrate you into an unwilling resignation. Others may block you from accessing your disability benefits. And the worst offenders will outright fire you while you are ill.

All of this can result in serious legal and economic consequences for them. As the above referenced cases illustrate, your employer cannot simply slough their termination responsibilities off to their insurer. Arguments of double-dipping or failure to mitigate are extremely difficult. In fact, they can actually result in bad faith or punitive damages.


If you were recently fired while ill and receiving disability benefits, contact us. For over 35 years, we have seen versions of this scenario play out, time and time again. Our lawyers primarily represent employees and we understand the intersection of wrongful dismissal and disability claims very well. If your employer has acted in bad faith, we will go to bat for you to ensure you receive all the benefits you are entitled to.

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