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When a Mentally Disabled Employee Resigns: The Three Legal Duties of the Employer
The resignation of an employee is generally viewed as a straightforward event. The employee communicates an intention to resign and the employer accepts that decision. Where, however, the employee should the employee suffer from a mental disability, the legal analysis becomes significantly more complex.
Recent human rights decisions, disability insurance cases, and negligence authorities suggest that employers may face multiple and overlapping obligations when a mentally disabled employee submits a resignation. In many cases, the employer’s legal responsibilities extend far beyond determining whether the employee intended to quit.
Three separate legal doctrines may be engaged:
• The human rights duty to inquire and accommodate;
• The common law and insurance law duties relating to disability benefit entitlements; and
• The duty of care imposed by negligence principles.
Together, these obligations reflect a common theme. The law increasingly recognizes that a mentally disabled employee may be incapable of protecting their own employment interests at the very moment when those interests are most vulnerable.
The Human Rights Duty to Inquire
The Alberta Human Rights Tribunal addressed this issue directly in Volpi v. Lifemark Health Corp
The complainant suffered from Bipolar II Disorder. Over a period of time he experienced increasing mental health difficulties and repeatedly requested time away from work. He advised management that something was wrong and that he required time away to avoid a relapse.
After being denied the additional leave he sought, the employee abruptly submitted a brief two-line resignation. Medical evidence later established that he was experiencing a hypomanic episode at the time he resigned.
The employer accepted the resignation without making any meaningful inquiry into whether the resignation was connected to the employee’s mental disability. Even after learning that the employee had been hospitalized following the resignation, the employer did not investigate whether the resignation was the product of the employee’s mental illness.
The Tribunal concluded that the employer had discriminated against the employee by failing to inquire into the connection between his disability and both his request for leave and his resignation. The Tribunal emphasized that where objective indicators suggest that disability may be influencing an employee’s conduct, an employer must pause and make reasonable inquiries before taking adverse action.
The significance of Volpi extends beyond its specific facts. The decision recognizes that an employer may have a positive obligation to investigate whether a resignation is truly voluntary when there are objective indications that a mental disability may be influencing the employee’s decision-making.
Liability was found. A second hearing will follow to determine the remedy.
The Duty to Protect Disability Benefit Rights
A second line of authority arises from disability insurance litigation.
Canadian courts have repeatedly recognized that employers administering group insurance plans may act as agents of the insurer. In such circumstances, the employer’s conduct may bind the insurer and may expose the employer itself to liability.
This principle appears in cases such as London Life Insurance v. Baker, International Brotherhood of Teamsters v. Taylor-Read Enterprises, Pittman v. Manulife, 1Herbert v. Manulife Financial and Ferguson v. Halton. These decisions recognize that employees frequently depend upon their employer for information, forms and assistance regarding disability coverage.
The decision in Tarailo v. Allied Chemical is particularly noteworthy.
The employee suffered from a serious mental illness. Following workplace concerns, the employer accepted his resignation. The court nevertheless concluded that the employer was aware of the employee’s disability and was responsible, together with the insurer, for the resulting disability claim.
Similarly, Ferguson v. Halton confirmed that an employer may have a duty to assist an employee in applying for long-term disability benefits and to ensure that employees understand the steps necessary to secure such coverage.
These decisions suggest that where an employee may qualify for disability benefits, an employer cannot simply remain passive. The employer may have obligations to provide information, forms, assistance and guidance to ensure that the employee’s entitlement is not lost through ignorance or misunderstanding.
The Negligence Duty
A third source of potential liability arises through negligence law.
Canadian courts have repeatedly recognized that employers may owe a duty of care in the administration of employee benefit plans.
In Card Estate v. John A. Robertson Mechanical Contractors 2, the employer failed to advise the employee of available insurance coverage and conversion rights. The negligence claim succeeded.
In Grams v. Maple Leaf Industries, the Alberta Court of Queen’s Bench found that an employer owed a duty to exercise reasonable care in the administration of a benefits plan. This duty included informing employees of application deadlines and the consequences of failing to comply with them.
Likewise, Barkley v. Sooter Studios imposed negligence liability upon an employer whose administrative errors resulted in the loss of insurance benefits.
Perhaps most significant is Menard v. Royal Insurance.
The employee resigned while suffering from significant emotional and psychological difficulties. The employer knew of her history and observed that she was tearful and under stress. Despite this knowledge, the employer failed to discuss available disability benefits, even though it had previously raised the issue with her during an earlier period of illness.
The court concluded that the employee was disabled when she resigned and held that the employer had an obligation to assist her in pursuing disability benefits. Damages were awarded for the resulting loss of benefits.
The Ontario Court of Appeal’s decision in Grinsell v. Riverside Health Care Facilities further supports the proposition that employers may owe a duty to advise employees regarding available insurance options and to administer benefit plans competently.
The claim in negligence should be reviewed with this post in note.
The Convergence of the Three Duties
Viewed independently, each of these legal doctrines imposes significant obligations on employers.
Viewed together, they reveal a broader legal principle.
Where an employee suffering from a mental disability resigns, the employer’s responsibilities do not necessarily end with acceptance of the resignation.
The employer may simultaneously owe:
• A human rights duty to inquire whether the resignation is connected to a disability and whether accommodation is required;
• A disability insurance duty to provide information, forms and assistance concerning available disability benefits; and
• A common law duty of care to avoid negligent conduct that may deprive the employee of valuable insurance rights.
The same factual circumstances may therefore support multiple causes of action.
An employee who resigns during a psychiatric episode may allege discrimination because the employer failed to investigate the role of disability. The same employee may allege that the employer failed to advise them of disability benefits or failed to assist with a disability claim. The same facts may also support a negligence claim for the loss of insurance benefits.
The Vulnerable Employee
The unifying theme underlying these cases is employee vulnerability.
The mentally disabled employee who submits a resignation may be the very person least capable of appreciating the legal consequences of that decision.
Such an employee may not understand the availability of short-term or long-term disability benefits. They may not appreciate filing deadlines. They may not be capable of gathering medical evidence or completing claim documentation. They may not even recognize that their decision to resign is itself being influenced by a medical condition.
The law has increasingly responded to this vulnerability by imposing obligations upon employers to inquire, inform and assist.
Damage Claim
The damage claim may be significant. Should the conduct of the employer lead to the permanent loss of disability benefits, the claim may well include the entirety of lost disability insurance sums. This may be enormous should the disability be chronic. There may also be claims for aggravated and/or punitive damages.
Conclusion
The resignation of a mentally disabled employee should never be viewed solely as a question of whether the employee intended to quit.
Modern Canadian law increasingly recognizes three distinct legal obligations that may arise in such circumstances.
Human rights law may require the employer to inquire into the role of disability and consider accommodation before accepting the resignation.
Insurance law may require the employer to provide information and assistance concerning disability benefits.
Negligence law may impose liability where the employer’s conduct causes the employee to lose valuable insurance rights.
The prudent employer confronted with an apparently voluntary resignation from a mentally disabled employee should therefore proceed cautiously. Before accepting the resignation as final, the employer should consider whether accommodation obligations are engaged, whether disability benefits may be available, and whether further inquiry is necessary to protect the employee’s interests.
Failure to do so may expose the employer to liability under all three legal doctrines.