In Ontario, your employer must legally maintain your health, dental, and life insurance benefits for the statutory notice period (up to 8 weeks) under the ESA. Under common law, you are generally entitled to benefit coverage or compensation for the entire reasonable notice period, which can last up to 24 months.
Your Right to Benefits Under the Ontario Employment Standards Act (ESA)
When negotiating a severance package in Ontario, many employees focus solely on the financial payout and completely forget about their corporate benefits. 💊 However, losing your health and dental coverage can be a devastating financial blow, especially if you have ongoing medical needs. Thankfully, the Ontario Employment Standards Act (ESA) offers a baseline level of protection. By law, your employer cannot instantly cut off your benefits the moment you are fired.
Under the ESA, an employer must maintain your regular workplace benefits for the duration of your statutory notice period. 📅 Depending on how many years you worked for the company, this statutory period ranges from one to eight weeks. During these weeks, your health care, dental care, vision care, and life insurance must continue exactly as if you were still actively working in the office. Any attempt by an employer to cancel your benefits before this period ends is a direct violation of Ontario employment law.
Benefits During the Common Law Reasonable Notice Period
While the ESA provides a basic safety net, your actual entitlements under common law are usually much greater. 💵 In Ontario, wrongfully dismissed employees are often entitled to a reasonable notice period that can last up to 24 months, depending on factors like age, seniority, and the local job market. The guiding principle of wrongful dismissal is that you should be kept whole during this notice period. Therefore, you are legally entitled to the continuation of your benefits, or equivalent financial compensation, for the entire duration of your common law notice period.
If your employer offers you a 10-month severance package but cuts off your benefits after only 8 weeks, that is considered a wrongful dismissal. ❗ If you happen to get sick, need expensive dental surgery, or tragically pass away during those remaining months, your former employer could be held legally liable for the massive out-of-pocket costs you or your family incur. To avoid this massive liability, many employers prefer to keep you on their group plan, or they will pay you a lump sum premium to go buy private insurance.
What Happens to Specific Types of Benefits?
Not all benefits are treated the same way when you leave a company. 🔍 It is highly important to review your specific employment contract and the fine print of the insurance provider’s policy.
Health, Dental, and Vision Care
These are the most common benefits and usually the easiest to maintain during a salary continuation period. If the insurance provider allows it, you will simply keep your drug card and continue making claims as normal. If the insurer refuses to cover dismissed employees, your employer must pay you the cash equivalent so you can purchase a private plan.
Life Insurance and Disability Coverage (LTD/STD)
Disability insurance is incredibly tricky. Many group insurance policies strictly state that Long-Term Disability (LTD) and Short-Term Disability (STD) coverage ends on your last active day of work. If your employer cannot keep you on the disability plan, they must warn you. You often have a 31-day window to convert your group life insurance into a private individual policy without needing a medical exam.
Pension Contributions and RRSP Matching
If your employer matches your RRSP contributions or pays into a pension plan, this compensation must also be factored into your severance. You are generally entitled to the value of the employer’s contributions for the entire common law notice period. If they refuse to keep contributing, your lawyer will add the monetary value of those lost contributions to your overall settlement demand.
How to Protect Your Benefits During a Wrongful Dismissal
Do not let an employer bully you into signing away your health coverage. 💪 Follow these straightforward steps to protect yourself during negotiations.
- Step 1: Read the Offer Carefully. Look specifically for a clause detailing your benefits. It should explicitly state the date your coverage ends. If it only offers 8 weeks of coverage for a 12-month severance period, it is inadequate.
- Step 2: Check Conversion Options. Contact your Human Resources department or the insurance provider directly to ask about converting your group life and disability insurance into a personal plan.
- Step 3: Calculate Out-of-Pocket Costs. Estimate how much you spend monthly on prescription drugs, therapy, and dental work. Give this number to your lawyer so they can negotiate a proper cash allowance if the group plan cannot be extended.
- Step 4: Consult a Law Firm. Have an Ontario employment lawyer send a demand letter ensuring that benefit continuation, or compensation in lieu of benefits, is legally baked into your final severance agreement.
Frequently Asked Questions (FAQ)
Can an employer force me to pay the premiums for my benefits?
During the statutory ESA notice period, your employer must continue paying their portion of the premiums. For the extended common law notice period, if you were normally required to pay a percentage of the premium while employed, you will likely still have to pay that percentage during your severance period.
What if I get severely injured after my benefits are wrongfully cut off?
If an employer wrongfully cancels your benefits during your reasonable notice period, and you incur medical expenses or become disabled, the employer essentially becomes your insurer. They can be sued for the out-of-pocket medical bills or the total value of the disability payments you would have received.
Do I keep my car allowance or phone plan during severance?
If the car allowance or cell phone was provided purely for business use, it usually stops. However, if it was treated as a personal perk or part of your regular compensation (meaning you used it for personal reasons too), you are generally entitled to its financial value during the notice period.
Does getting a new job stop my severance benefits?
Usually, yes. Due to the duty to mitigate, if you accept a new job that provides a comparable health and dental plan, your former employer’s obligation to maintain your old benefits generally ends. This is something your lawyer will clarify in the settlement agreement.
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