Many employers ask us whether it's part of their legal duty to provide an employee benefits package* for their employees in Ontario.
The short answer is: No.
There is no law in Ontario that requires employers to provide an employee benefits package to their full-time staff in Ontario.
Then minimum requirements of Government-mandated employee benefits include participation in Employment Insurance (EI), Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP), Worker's Compensation (WC) or Workplace Safety and Insurance Board (WSIB).
However, if you've implemented an employee benefits package that is above the government-mandated benefits, then there are a few legal protections that kick in now that you have one.
How you classify employees within your company
While employers are able to specify which "classes" of employees are eligible to receive benefits, they must be careful on how they group them. Employee benefits classes cannot be deemed discriminatory, so they should not be based on gender, age, or another identifier protected under the Ontario Human Rights Code or Canadian Charter of Rights & Freedoms.
Acceptable classification structures can be based on one of the following factors:
1. Occupation (Ex: "Engineers")
2. Tenure (Ex: "Employees with More than 10 years")
3. Management level (Ex: "Executives")
4. Hours worked (Ex: "Part-time employees")
There could be more, but be careful to ask your Canadian employee benefits broker first before setting up a new class.
How you handle company benefits upon termination
Once you've given an employee benefits package, if you terminate an employee with no cause, you will be required to extend the benefits package for the same duration as the notice period you provide. See the Ontario Employment Standards Act (ESA) regarding terminations for more detail.
How you handle employee benefits with a temporary leave
Temporary leave includes absences due to maternity/parental leave, sick leave, compassionate leave and layoff.
If an employee is taking some time off work, whether paid or unpaid, an employer may be required to extend the benefits package.
1. Parental/Maternity: employers are not allowed to discriminate against an employee who elects this leave: this means that if the employee wishes to continue participating in all benefits, it is their prerogative to do so. An employer cannot cut off benefits without the employee's explicit direction. While it may not be coded in the ESA to extend benefits during a lengthier severance, it may be within the common law scope of practice to do so. Check with your employment lawyer or Ontario group insurance broker first before offering anything in writing.
2. Layoff: Depending on the length and type of layoff, it is the employer's choice on whether to extend or continue benefits. The Ontario Employment Standards Act has a guide to what happens to benefits during a layoff in Ontario.
3. Protected leaves under the ESA: If an employee is taking a protected leave under the Ontario Employment Standards Act, an employer must continue all benefits during that time.
How you cut or eliminate benefits
If you are considering eliminating some or all of the benefits package, there are some precedents where it can be deemed constructive dismissal, meaning generally that an employer forced an employee to be dismissed by significantly reducing their compensation such that they are forced to find a new job.
Talk to your employment lawyer, but if it's deemed that an employee lost a significant amount of their total compensation due to a cut in the benefits, an employer may be required by common law practice to compensate the employee as if they are being outright terminated.
* In this article, an "employee benefits package" refers to a Canadian group life insurance or Canadian group health and dental insurance package which provides employee benefits over and above the minimum requirements. Minimum requirements of Government-mandated employee benefits include participation in Employment Insurance (EI), Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP), Worker's Compensation (WC) or Workplace Safety and Insurance Board (WSIB).