Benefits — Ontario Employment Law
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About Benefits
In Ontario employment law, workplace benefits form a critical part of an employee's total compensation package. While base salary or hourly wages represent direct remuneration, benefits typically encompass health and dental insurance, life and accidental death policies, pension contributions, and car allowances. Conflicts frequently arise regarding these benefit plans, particularly when the employment relationship ends or when trust between the parties breaks down.
When a worker is terminated without cause, their entitlement to continued benefits hinges on both statutory minimums and common law principles. Under the Employment Standards Act, 2000 (ESA), an employer is strictly required to maintain all regular benefit plan contributions during the statutory notice period. This means the employer cannot cancel a worker's health, dental, or life insurance during those statutory weeks.
Beyond the ESA, if an employee is entitled to common law reasonable notice, Ontario courts operate on the principle that the individual should be made "whole" for the duration of that notice period. As confirmed by the Court of Appeal for Ontario, calculating damages for wrongful dismissal should generally include the value of the benefits the employee would have received had they been allowed to work until the end of their notice period. Unless a legally enforceable employment contract explicitly limits compensation to base salary upon termination, cutting off benefits prematurely can lead to claims for the lost value of the coverage or for actual out-of-pocket medical expenses incurred.
Benefits also carry a high duty of honesty. In rare but serious cases, employers or union trustees may pursue legal action, including claims for deceit, civil fraud, and punitive damages, if employees submit forged documents or commit perjury to improperly access pre-retirement, health, or death benefits.
Figuring out exactly which perks, policies, and plans you are legally entitled to retain or be compensated for after a dismissal can be technically complex, making it wise to have your separation package thoroughly reviewed by an Ontario legal professional to ensure nothing was improperly stripped away.
Frequently Asked Questions
Can my employer cancel my health benefits on the day they fire me?
No. Under the Employment Standards Act, your employer is legally required to continue your regular benefit plan contributions throughout your statutory notice period. Cancelling coverage immediately upon termination violates Ontario minimum standards.
Am I entitled to benefits during my common law notice period?
Yes, unless you signed a valid employment contract that strictly and lawfully limits your entitlements upon termination. Under common law, damages for wrongful dismissal should include the loss of your benefits package for the entire reasonable notice period.
How is the loss of benefits calculated in a severance package?
Courts often award compensation for lost benefits either by reimbursing the actual out-of-pocket expenses you incurred to replace the coverage or pay for medical needs, or by calculating the cost the employer would have paid for your premiums, which is frequently estimated at 10% to 15% of your base salary.
What happens if I submit a false claim to my workplace benefit plan?
Submitting fraudulent claims for health, dental, or other benefits is a serious offence that constitutes just cause for termination. In severe cases, companies or union trustees can sue you for fraud, seeking the return of the money and punitive damages.
When is it time to talk to an employment lawyer about my benefits?
If your employer offers you a severance package that provides base salary but entirely ignores your pension matching, car allowance, and health insurance obligations, you should reach out to legal counsel to ensure you are receiving the full compensation you are owed.
Common Scenarios
- A 61-year-old middle manager with 32 years of service is dismissed and awarded 24 months of common law notice by a judge. However, the trial judge initially forgets to include the value of their health and retirement benefits, requiring an appeal to ensure the final award properly reflects their total lost compensation.
- A company terminates an employee and immediately shuts off their health insurance policy on the day of dismissal, despite providing 8 weeks of termination pay. This violates the ESA, exposing the employer to liability if the former employee faces an unexpected medical emergency the next week.
- A group of former employees coordinates to forge documents and submit fake claims to access pre-retirement death and health benefits early. The union trustees uncover the deception and sue the group, eventually securing tens of thousands of dollars in punitive damages against the individuals for their high-handed fraud.
What You Should Know
- Always review your employment contract's termination clause carefully, as an employer must use very clear, legally compliant language to strip away your common law right to benefits during a notice period.
- If you know your extended health or life insurance is being terminated due to dismissal, ask about your policy's conversion privilege. Many insurers allow you to switch to an individual plan without a medical exam if done within 31 days.
- Keep meticulous records and receipts of any prescription, dental, or therapeutic costs you pay out of pocket after being terminated, as these may serve as evidence of your damages in a wrongful dismissal claim.
- Never assume your severance is fair just because the weeks of salary are correct; seek a knowledgeable practitioner's opinion to confirm that the hidden monetary value of your pensions, allowances, and insurance plans has been factored in.
Featured Cases
The Corporation of the Town of Whitby v. The Whitby Professional Fire Fighters’ Association, Local 2036
2020 ONSC 936 (CanLII) · 2020-02-12Judicial Review: Arbitrator Upheld on Collective Agreement Benefits
This is a judicial review of an arbitrator's decision concerning the interpretation of a collective agreement between the Town of Whitby and the Whitby Professional Fire Fighters’ Association. The central issue was whether the employer was obligated to provide accidental death benefits despite an insurance policy exclusion, and whether the arbitrator's interpretation was reasonable under the Vavilov framework.
Trustees of the International Brotherhood v. S. et al.
2014 ONSC 3656 (CanLII) · 2014-06-26Fraudulent Benefit Claims: Punitive Damages and Costs
This is a merits decision involving a claim by union trustees against former employees or beneficiaries for fraudulently obtaining pre-retirement death and health benefits through forged documents and perjury. The court established liability for fraud, deceit, and conspiracy, granting declaratory relief to prevent further unjust enrichment and awarding punitive damages of $50,000 against each defendant for their high-handed conduct. Costs were awarded on a substantial indemnity basis due to the complexity and seriousness of the fraud.
J. v. Metroland Media Group Ltd.
2014 ONSC 3507 (CanLII) · 2014-06-09This is a procedural or merits decision regarding a dispute over short-term disability benefits under an employment contract. The case concerns the interpretation of the contract of employment and the entitlement to specific benefits.
P. c. Quadraspec Inc.
2014 ONCS 2431 (CanLII) · 2014-04-17This case involves a dispute regarding the cessation of employment, specifically focusing on the required notice period ('préavis'), salary entitlements, and benefits upon termination.
B. v. Sears Canada Inc.
2012 ONCA 344 (CanLII) · 2012-05-18An appeal to the Court of Appeal from an application judge's decision regarding an employee's entitlement to post-retirement benefits. The employee worked for the employer for over 31 years, initially part-time and then full-time. Human resources advised her in 2005 that her combined service meant she would qualify for retirement benefits in about three years, but the employer later denied the benefits upon her termination. The application judge ruled that this formed a contractual agreement entitling her to the benefits. The Court of Appeal agreed there was evidence to support this agreement and dismissed the employer's appeal.
K. v. Kelseys International Inc.
2007 CanLII 56520 (ON SC) · 2007-12-19This is a procedural ruling concerning jurisdiction in a workplace safety and benefits dispute between an employee and their employer.
Toronto Professional Firefighters' Association v. Toronto (City)
2007 CanLII 10218 (ON SCDC) · 2007-03-29Firefighters' Association v. City: Arbitration on Benefits
This is a judicial review of an arbitrator's decision concerning the applicability of collective agreements and the entitlement to accidental death benefits for a firefighter who died from an occupational illness. The Divisional Court reviewed the arbitrator's finding that the old collective agreement governed the benefits claim and addressed the interpretation of 'accidental' death and 'line of duty' provisions.
R. v. Washington Mills Electro Minerals Corporation
2005 CanLII 44668 (ON CA) · 2005-11-24Wrongful Dismissal: 32-Year Employee 24-Month Notice Period
The Court of Appeal for Ontario heard an appeal regarding the reasonable notice period and damages awarded to a 61-year-old employee with 32 years of service in middle management. The court found that the trial judge erred by not awarding 24 months' notice and by failing to include the value of benefits during the notice period, while upholding the finding that there was no bad faith in the termination.
M. v. Manufacturers Life Assurance Co.
2005 CanLII 33120 (ON CA) · 2005-09-16Labour Relations: Collective Agreement Jurisdiction & Arbitration
This is an appeal concerning the jurisdiction of the courts versus arbitration in a dispute over long-term disability (LTD) benefit entitlements under a collective agreement. The Court of Appeal for Ontario determined that the essential character of the dispute arises from the interpretation of the collective agreement, thereby requiring the courts to decline jurisdiction in favor of arbitration for the unionized employees involved.
B. v. Governor and Company of Adventurers of England and Trading into Hudson’s Bay
2003 CanLII 48465 (ON CA) · 2003-08-26This is an appeal to the Court of Appeal from a motions judge's decision in a representative action about a pension plan. Former employees of the Hudson Bay Company claimed a share of the pension plan's actuarial surplus after their division was sold. The motions judge answered several questions of law prior to trial, finding that the employer could not amend the plan to pay administrative costs from the pension fund. The Court of Appeal allowed the employer's appeal and set aside those answers because the legal issues were too factually linked to be decided on a motion. The court ordered all issues regarding administrative costs to proceed to a full trial.
M. v. Alexander Centre Industries Ltd.
2001 CanLII 3871 (ON CA) · 2001-04-30Wrongful Dismissal: Non-Deductibility of Disability Benefits
This is an appeal to the Court of Appeal from a trial judge's decision about whether disability benefits should be deducted from wrongful dismissal damages. The employee, K.M., sued his former employer, Alexander Centre Industries Limited, after he was fired while on medical leave. The trial judge awarded the employee 24 months' notice plus two months for bad faith discharge, and declined to deduct his disability benefits from the award. The Court of Appeal dismissed the employer's appeal, finding that the disability benefits were akin to private insurance because the employee accepted a lower starting salary in exchange for the coverage. The trial judge's award of 24 months' notice and two months for bad faith without deducting the disability benefits stands.
E.M. Plastic & Electric Product Ltd. v. H.
1993 CanLII 17571 (ON CA) · 1993-12-15This is an appeal to the Court of Appeal for Ontario concerning a wrongful dismissal and constructive dismissal dispute. The case addresses issues related to damages and benefits owed to the employee upon termination.
A. v. Les Carreaux Ramca Ltée
1992 CanLII 7748 (ON SC) · 1992-04-16This is a wrongful dismissal case involving allegations of constructive dismissal. The dispute centers on the calculation of damages, specifically regarding benefits entitlements following the termination of employment.