What are an employer’s options when an insurer refuses to extend coverage?
An employer that fails to maintain benefit contributions during an employee’s notice period may be responsible for costs incurred by the employee due to loss of coverage. This exposure can add up quickly if the worst happens - for example, an employee becomes disabled or passes away during an uninsured period.
Practically speaking, most insurers will continue benefit coverage during the statutory notice period. However, they will not continue certain benefits (such as life and disability insurance) beyond the statutory notice period (such as during the common law reasonable notice period). If an employment agreement does not limit an employee’s termination entitlements to the statutory notice period, the employer may be required to provide benefit coverage by stepping into the shoes of the insurer.
For example, in Brito v, Canac Kitchens, 2011 ONSC 1011, the Ontario Superior Court of Justice held the employer responsible to pay the employee’s short-term and long-term disability benefits as if the employer had not cancelled coverage at the end of the statutory notice period. The employee became disabled after he was treated for cancer 16 months into his 22-month common law notice period. The court ordered the employer to pay the employee an amount equal to the long-term disability benefits he would have received up until age 65 - more than $200,000.
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