A recent Ontario decision has considered two conflicting methods of assessing the damage claim for lost benefits, particularly, as on the facts of this case, where the employee has taken no steps to purchase replacement benefits.
The Conflicting Views
The judge reviewed two opposing lines of cases. One had concluded that there could be no claim where there was no financial loss incurred for alternative benefits. The second had determined that even where there were no such out of pocket costs incurred, the court would award compensation for the “loss” nonetheless. In this latter approach, the court would assess a likely value for the benefits as a percentage of overall compensation.
The Winner Is
The trial judge awarded the benefits claim based on a notional valuation of 10% of salary. The company counsel did not dispute the particular issue of the percentage assessment. Employee counsel would be prudent to show some evidence of how the benefits should be assessed, where it is possible to do so from company promotional literature or similar documents.
There is appellate authority for this view which was not directly referenced in the case. This does appear to the prevailing correct view on this question.
One More Thought
A prior Ontario case awarded the benefits loss based on the employer’s costs of the benefits. This approach was not addressed in the above decision. In this latter case, there was no evidence presented by the employee as to how to value the benefits claim as a percentage of salary. This is not the typical approach and is likely an outlier but must be noted.
Even More Issues
The termination of benefits may be even more complicated. A serious prolonged illness in the common law notice period could lead to exposure to a claim for lost disability benefits to age 65. Disability insurance often cannot be purchased after termination, particularly where there is a medical history. Such a claim may be gargantuan.
Further benefits are deemed to be continued for the minimum statutory notice period to a cap of 8 weeks. Such an illness in this period would likely lead to a claim against the disability insurer directly.
Usually, life insurance can be continued without a new medical underwriting. The employer should be careful to advise the terminated employee of this right. This is often a modest time period to do so which varies by policy. The employer could be liable to a claim where it fails to advise the terminated employee of this issue.
The question of benefits loss is often considered a secondary issue. The failure to address it diligently could lead to significant claims. Get advice and understand your obligations and your rights.
Employees’ Take Away
The law on this issue is far from intuitive. It is important to be advised about your rights.
Get Advice Before You Act
This question of benefits loss is not as simple as might be expected. It is most important to understand all aspects of this question. Contact the offices of Toronto employment and labour lawyers Mallins Law. We regularly advise employees and employers on legal workplace issues. Contact us online or by phone at 647-792-0310 to schedule a consultation.
 The question of stock options was deliberately omitted from this discussion as it is a topic unto itself.