Employee wage loss benefits during leave: a reference for managers

In the course of our workplace law practice, employers often raise concerns about staff that need to be off on medical leave. One such concern centres around resources that an employer can provide to guide the employee toward wage loss replacement benefits while ill or disabled. 

This summary is intended to provide a quick reference for managers, including HR managers, who would like to provide information to employees on leave. 

Firstly, this question is often asked because employees are not entitled to pay from the employer while on medical leave unless there is a statutory paid sick leave entitlement, their employment contract or an employer policy provides for a paid sick leave entitlement, or there is another arrangement to which the employer has agreed which will compensate the employee for lost pay during leave. 

That said, employees in Canada often have options through which to receive financial compensation during medical leave though options vary by jurisdiction, employment sector, and employer policies and programs. These options consist of federally regulated benefits, provincial programs, employer-sponsored plans, and Employment Insurance options. 

Options for medical leave 

Federal medical leave with pay 

For federally regulated employees, the Canada Labour Code mandates up to 10 days of medical leave of absence with pay per calendar year, with each day paid at their regular rate of wages for their normal hours of work. Starting Jan. 1, employees earn one day of medical leave with pay at the beginning of each month until they earn a maximum of 10 days in the year. This affects approximately one million employees working for 19,150 employers in federally regulated industries including transportation, airlines, telecommunications and banking. 

Provincial sick leave entitlements 

Provincial regulations vary significantly across Canada. British Columbia provides five paid sick days and three unpaid sick days each year, becoming the first province in Canada to legislate this level of paid time off for workers who fall ill. Most other provinces provide only unpaid sick leave, such as Ontario's three unpaid sick leave days per year and Nova Scotia's three days of unpaid, job protected sick leave per year. 

Employment Insurance (EI) sickness benefits 

EI sickness benefits can provide up to 26 weeks of financial assistance if an employee is unable to work for medical reasons. The coverage provides 55 per cent of an employee’s earnings up to a maximum of $695 per week. To qualify, the employee must have accumulated the requisite number of insured hours of work in the last 52 weeks before the start of a claim, their earnings must have been reduced by at least 40 per cent, and they need medical documentation proving they are unable to work. 

For EI benefits, the employee must get a medical certificate showing that they are unable to work for medical reasons and for approximately how long. The online EI application is efficient and should be completed as soon as possible and no more than four weeks after their last day of work or else they risk losing benefits. 

Employer-provided sick time 

Many employers provide sick leave beyond statutory minimums. For example, many employers provide 10 paid sick days per year as part of their benefits package (though this may include the five statutory paid sick days in BC, for example). Some employers also provide their own paid sick leave or short-term disability plan. Therefore, employees can be advised of both employer-provided excess sick leave options or any employer-sponsored short-term disability benefits. 

Wage-loss indemnity plans 

Wage-loss indemnity payments are forms of compensation for the loss of wages or salary during periods of illness or injury, and these plans may also provide payments for maternity, adoption or parental leave. Insurance providers usually administer wage-loss indemnity plans. However, some employers may choose to administer their own plans. 

Long-term disability options 

For some medical conditions, it may be necessary to take a longer period of leave. Therefore, many employers offer long-term disability (LTD) coverage as part of a benefits package. While it is important to assess each plan independently, LTD insurance often provides income replacement for an extended period and sometimes up to the earlier of when the condition no longer causes disability or age 65. 

Directing employees to the right leave option 

It is beneficial to be familiar with the basic details of any LTD plan in order to direct employees toward available coverage where appropriate.  

Also, it is prudent to bear in mind programs such as Canada Pension Plan disability benefits or Disability benefits under a provincial Pension Plan. 

When an employee is contemplating or on a medical leave, there are several wage-loss benefit options that may be available to them. The above is intended to provide a brief overview of the main categories in order for employers to assess which ones may be available in any given circumstance. While wage-loss information can be invaluable to employees and we encourage employers to provide applicable information on options, it is important that employees realize that they are solely responsible for applying for and maintaining eligibility for such benefits.  

Richard B. Johnson is a partner and co-founder of Ascent Employment Law in Vancouver.