Can employer terminate operator on disability while business depletes

[arunkumar.edwin@kirchhoff-automotive.com]

#95140

Forum: Private

An employee is on LTD and later on company lost major business and is in the process of layoff according to seniority. Can employer terminate employment of the operator on LTD (when the turn arrives) by providing a termination package.
Also if a long-term inactive employee now provides documentation that they can return to work (modified), is the employer obligated to consider accommodation while the business is down and layoff is in process.

[Haley O’Halloran]

#95141

These are nuanced employment law questions, and while I can offer a general overview, your organization should seek legal counsel for advice specific to your situation and jurisdiction.

That said, here are general principles relevant to both of your questions:

1. Employee on LTD — Can the Employer Terminate with a Package Due to Layoffs?
General rule:
Yes, an employer can terminate an employee on long-term disability (LTD) if the termination is unrelated to the disability and is instead part of a bona fide layoff or restructuring (e.g., loss of major business, eliminating positions by seniority).

Conditions:

The termination must be non-discriminatory (i.e., not because of the disability).

The LTD status doesn’t grant immunity from layoff or restructuring if the decision is not based on the disability.

A reasonable severance/termination package must be provided, aligned with employment standards, contract terms, and common law (where applicable).

It’s recommended to document the reason for termination (e.g., seniority-based layoff) clearly and neutrally.

Caution:

If the person is permanently disabled and not expected to return, the employment relationship may be considered frustrated, which can also be grounds for termination. In that case, reasonable notice or severance is still typically owed, though possibly reduced.

Terminating someone while on LTD always carries a higher legal risk, especially under human rights law, so it’s best to consult an employment lawyer before proceeding.

2. Inactive Employee Wants to Return with Medical Clearance for Modified Work — Must Employer Accommodate?
Yes, generally — if an employee presents documentation that they are medically cleared to return to work (even with modified duties), the employer has a duty to accommodate up to the point of undue hardship (under human rights law).

However:

If the organization is undergoing legitimate layoffs or restructuring, and there is no available work (or no modified work available), the duty to accommodate may not require the creation of new roles or bumping other employees.

If accommodation would cause undue hardship — financially, operationally, or with safety risks — the employer may not be obligated to proceed.

If layoffs are occurring by seniority, and the returning employee is not senior enough to displace others or be retained, they may still be subject to layoff (though again, not due to the disability).

Best Practices:
Document all decisions clearly and neutrally.

Engage in the interactive accommodation process with the returning employee (i.e., discuss options, ask for medical details within reason, explore modified duties).

If no suitable work exists, explain and document why accommodation isn’t possible at this time.

Ensure the layoff or termination is consistent with how other employees in similar roles/seniority are being treated.

Seek legal review before terminating or refusing to accommodate a returning employee, especially during downsizing — the legal risks are higher.

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