A recent Saskatchewan Court of Appeal decision serves as a stark reminder that wrongful dismissal damages can extend far beyond lost salary. When an employee loses access to disability coverage upon dismissal and becomes disabled during the common law notice period, the employer may face liability for the full value of benefits that would otherwise have been available.
The decision
In Saskatchewan Indian Gaming Authority Inc v. Pasap, 2025 SKCA 15, the Saskatchewan Indian Gaming Authority (SIGA) dismissed Mr. Pasap on August 17, 2012 without notice or pay in lieu. The case turned on a critical question: what happens when a serious medical event occurs during the notice period that the court determines should have been provided?
SIGA’s general manager had told Mr. Pasap to resign or face investigation and dismissal for misconduct. The trial judge found that SIGA breached its own policies, which required progressive discipline and an investigation before termination. The trial judge concluded that Mr. Pasap had been wrongfully dismissed and assessed reasonable notice at eight months.
Four months into that notice period, on December 14, 2012, Mr. Pasap suffered a serious medical event that left him permanently disabled. Because he had already been dismissed, he no longer had disability coverage when the event occurred. He argued that SIGA should be responsible for the long-term disability benefits that had been part of his employment package. Both levels of court agreed.
The Court of Appeal upheld the trial judge’s finding that Mr. Pasap met the definition of “total disability” under SIGA’s disability benefits plan. Although Mr. Pasap found some intermittent work after the medical event, his stop-and-start employment pattern and the evidence of his cognitive and physical limitations supported the conclusion that he remained totally disabled under the plan. As a result, Mr. Pasap was awarded the full value of the long-term disability benefits he would have been entitled to had he remained employed during the common law notice period.
The damages award followed from a straightforward chain of findings: (1) long-term disability insurance was an employment benefit; (2) Mr. Pasap would have been covered during the reasonable notice period; (3) the medical event occurred during that period; and (4) his disability continued to meet the plan’s definition of “total disability.” Since immediate dismissal of Mr. Pasap had removed that coverage, SIGA was responsible for the resulting loss. With Mr. Pasap entitled to receive long-term disability benefits until age 65, the calculated damages exceeded CA$1.2 million.
Different termination structure, different result: Belanger
Belanger v. Western Ventilation Products Ltd, 2019 ABQB 571, provides an example of how different termination structures can lead to very different damages awards in the context of disability benefits. In this case, a 43-year employee received a termination notice providing approximately one year of working notice. The parties agreed that given his long service and senior position, a 24-month notice period should have applied, meaning the working notice was insufficient and Mr. Belanger had been wrongfully dismissed. However, after receiving the termination letter Mr. Belanger became ill, began receiving disability benefits and was deemed totally disabled within the one year working notice period, with benefits continuing until his 65th birthday.
The court declined to award any damages and granted the employer’s application for summary dismissal. Although the working notice was insufficient, there were no compensable damages because Mr. Belanger could not have worked during the notice period regardless and the only payments he would have received were the disability benefits he did, in fact, receive. Crucially, the working notice permitted him to remain employed and thus maintain access to the employer’s disability plan when his illness arose. The court emphasized that holding otherwise “would effectively make the employer the insurer of [the employee’s] health in circumstances where the employer took a proactive step in facilitating a disability program for its employees.”
Therefore, despite also being wrongfully dismissed and suffering a disabling event shortly thereafter, Mr. Belanger was not entitled to any further compensation.
Key takeaways and practical considerations
The employer in Pasap could not have predicted that the employee would become totally disabled during the common law notice period. Yet this case illustrates the significant exposure that can result from wrongfully dismissing an employee. For this reason, in addition to human rights considerations, employers should exercise caution when contemplating the termination of an employee with known health conditions. Where termination is unavoidable, employers should explore working notice or consider making an additional offer in exchange for a release.
For more information on this topic, please reach out to Cristina Wendel, Jenny Wang or any member of Dentons’ Employment and Labour group.
Thank you to Dentons’ articling student, Markis Banek, for his assistance in preparing this blog post.
