External short-term disability (“STD”) plans managed by an insurance provider can be a huge time saver for employers and their HR partners. The other advantages include:

• Maintaining confidentiality regarding employees’ personal health information; and
• Deflecting the responsibility for denying an STD claim.

That said, the premiums and other financial costs associated with STD plans lead many employers to elect not to offer such coverage. Without an independent benefits provider or third party medical assessor to assist, the employer is responsible for reviewing and assessing medical information relating to employee absences. It can be tedious to ensure that there is up-to-date and complete information, but this task is critical to ensure that the employee does not fall off the radar; there is sufficient staffing while the employee is away; and the employer can plan for the employee’s anticipated return to work.

When I am advising employers that do not have a STD provider, I recommend the following steps for effective absence management:

• Assigning a point person: Beyond single day and sporadic absences, I find that short term absence management is best handled by a single company point person rather than individual managers to ensure consistency and diligence.
• Confidentiality is key: The reasons for an absence should be shared within and outside the organization only on a need-to-know basis. Confidentiality breaches can undermine employee morale and put the employer at risk for additional damage claims.
• Paper the absence: I work with many employers that deal with absences informally, including via text messages, and accept requests for time off without question. When an absence extends beyond a week, employers should confirm the reasons for and conditions of a leave in writing, with explicit deadlines for providing additional details.  The point person should set reminders for those deadlines and hold the employee accountable for meeting those deadlines.
• Paid sick and vacation days as an alternative to STD coverage: It is trite to mention the financial impact to employees who are off work due to a medical illness. The formal use of paid sick days is a middle ground between offering STD coverage and only making use of unpaid leaves of absence.  Sick days should be governed by a clear written policy that addresses accrual, carryover and other limitations.  Also, as noted in a recent blog by my partner, Adrian Ishak, the added benefit of providing paid sick time is that employers may qualify for EI premium reductions.  Permitting the use of vacation time during a leave will also offset the financial hit to the employee.
• Remind employees about EI sickness benefits and other leaves of absence: In the absence of an STD plan, an employee may be eligible for EI sick benefits and, down the road, CPP disability benefits. In addition, there are protected (but unpaid) leaves available to employees in Ontario.  Employers should make their employees aware of these options.
• Don’t be afraid of cutting off pay: Absent a policy to the contrary, employers can cease paying employees for days that they do not work. The employees’ benefit coverage should remain in effect, but employers can ask that employees remit their portion of the benefit premiums.
• Beware of Fraud: My colleague, Patrizia Piccolo, and I recently discussed concerns about employee fraud in relation to STD benefits. The same concerns apply in the absence of an STD plan.  Requests for time off should be taken in good faith, but employers should carefully scrutinize the requests and withhold salary and sick pay in the absence of appropriate medical documentation.
• Consult an employment lawyer: There is no cookie cutter approach to employee absences. The facts in every case are unique, and human rights, health and safety and other statutory and common law obligations intersect and affect decisions relating to leaves of absence.  Employers should seek legal advice about their STD protocol, particularly when STD is about to be denied to an employee.

Employers can save costs by foregoing external STD coverage, but in doing so, they lose the benefit of the independent, confidential absence management that a third party insurer provides.  To offset that loss of expertise, employers must establish an appropriate internal protocol for managing employee absences.

Jennifer Heath

About the Author: Toronto Employment Lawyer Jennifer Heath is an enthusiastic lawyer who is dedicated to improving the health and productivity of her clients’ workplaces. Jennifer advises clients on a wide range of common law, contractual and statutory obligations, including those obligations under the Employment Standards Act, 2000, Labour Relations Act and the Human Rights Code.  Her work also involves representing clients before the Superior Court of Justice, the Small Claims Court, the Human Rights Tribunal and the Ontario Labour Board.