Who pays for benefits for sick employees?
There is no law requiring employers to provide benefit coverage for their employees. Many, if not most, do.
Sometimes the employer pays the entire cost of the benefits coverage. Depending on the benefits offered, that can be a cost of anywhere from $300 to $500 a month.
Some employers require employees to pay half the cost of the benefits by having the employee’s half deducted from their paycheque.
In either case, the costs to the employer are significant and become even more so if an employee is off sick for an extended period of time.
Most employers I have seen will simply swallow the cost of all the benefits for at least a couple of months while an employee is off ill. Sometimes, however, employees are off for a very extended period of time and it could be years before they return to the workplace.
Most employers are not thrilled about absorbing the cost of the benefits coverage every month to the tune of thousands of dollars a year when the employee is not actually working and contributing to the business.
When somebody in human resources or payroll finally notices the bill that is being run-up I will often get a call asking what they can do to stop the bleeding. There are ways, with appropriate notice, to end the benefits coverage but it can get tricky and expose the employer to a human rights complaint. I have seen employee complaints that the employer is being selective about whose benefits are cut off and when. They claim, perhaps appropriately, that the employer tends to cut off people who are off for mental health-related reasons as compared to the benefits of those with more easily documented conditions.
They may try to claim that cutting off the benefits terminates their employment and triggers an entitlement to Employment Standards Act termination and severance pay. This happens even though employers did not want to end the relationship and were happy to hold a job open for the disabled employee.
The smartest thing for employers to do is to develop a policy about how long it will cover the cost of benefits. Whether it is six months, 12 months or two years, the employer should make it clear that the policy does not apply to maternity/paternity leaves pursuant to the Employment Standards Act.
It might indicate that where the employee usually pays half the cost of the benefits they have to start e-transferring the money to the employer before the end of each month to cover their half for the next month or else benefits will not be continued. The employer could give a grace period of the first two months during which it is prepared to cover the entire cost or give some lesser grace period.
Any such policy should really only apply after a month of absence and not kick in for a two-week flu.
The policy should make it clear that the employer does not consider implementation or execution of the policy and the discontinuance of the benefits to constitute a termination of the relationship.
An employer has an obligation to accommodate a disability-related absence to the point of undue hardship and that can mean being prepared to return the employee to their position when they are better.
Unfortunately, I have seen a number of situations in which employees will string an employer along and keep sending in doctor’s notes for an eternity so they can keep their free benefits going. They have no intention of returning to the workplace but have figured out that as long as they keep sending in doctor’s notes they will have benefits coverage.
If an employee fails to send in their cheque the employer should send a letter attaching once again the written policy and confirming that if the monies aren’t received by two weeks later benefits will be discontinued. That should be sent by email, regular mail and registered mail. The employer does not want to hear excuses later that the employee was unaware of the situation because the employer did not communicate the right way.
Many people may think it is harsh to make employees pay any of the cost of their benefits while they are off sick. The reality is that when the benefits costs of an employer get too large, they start shaving back the benefits for everybody: The dental plan doesn’t cover as much and the paramedical coverages are reduced. It becomes a balancing act between the coverages everyone enjoys and the cost of the overall plan.
Developing a clear and uniformly enforced policy makes it more fair for everyone.
This article was originally published by The Hamilton Spectator.
