Employer Obligations for Continuing Employee Group Benefits
By Neil Curtis & Rob Green
NCHR, our partners in Human Resource Management, receive many questions related to employer obligations for continuing employee group benefits (such as life and extended health insurance, accidental death and dental plans), as well as pension plans when employees take leaves from work that are legislated by the Employment Standards Act (ESA). This includes pregnancy, parental, and family medical leave to name a few examples.
Note: we are referring to job protected leaves from work that are supported by applicable laws in Ontario.
Generally speaking, employer requirements related to benefits and pension plan continuation during a leave of absence are as follows:
An employee who is on pregnancy, parental, personal emergency, family caregiver, family medical, critically ill child care, organ donor, or crime-related child death or disappearance leave has the right to continue to participate in life insurance plans, accidental death plans, extended health plans and dental plans, and pension plans during his or her leave from work.
This can be done by offering the employee the opportunity to continue to pay their share of the benefits premiums (and/or pension contributions) during their absence.
If the employee opts-out of making these payments (in writing), the organization can generally take the employee off the benefit plan for the duration of the leave from work.
In the case of employee termination, here is a summary of employer obligations (when the termination is initiated by the employer):
Employees are required to be treated as ‘whole’ during the ESA Statutory Notice Period. This generally requires that benefits, company RRSP, pension plan contributions, etc. all remain in full effect during the Statutory Notice Period at minimum, just as if the employee were still employed. This must be clearly stated in the termination letter provided to the employee at the time of separation.
As well, employers should outline options in writing for employees who are terminated (by the employer for any reason), about potentially transitioning their group benefits plan to a private plan if applicable. This commonly requires the employee to contact the benefit provider directly within 30 or 60 days of the discontinuance of their group plan to discuss potential options for transitioning to a private plan, at a cost to the employee. Failure to enlighten employees of these options upon termination creates unnecessary risk to your organization. Employers are strongly encouraged to discuss this with the insurer before making the decision to end the employment of an employee, to ensure terms and options are clearly understood.
Of course, there are exceptions to the situations outlined above. If you have an employee who is taking leave from work in the near future – or if you intend to terminate the employment of an employee – please contact us to help determine the right path for your specific situation.
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