Suspensions from the Workplace – Paid or Unpaid?

Employees are sometimes placed on suspension from their workplace, whether paid or unpaid and are unaware of their rights during this time frame. Is the employer allowed to do this?  Should you be getting paid? Is this even a good reason to be suspended? During this confusing time, it is best to consult with an employment lawyer to learn your rights. This information will cover some of the common reasons for suspensions from the workplace.

There are primarily two reasons for which an employer may want to suspend an employee:
1) For administrative reasons such as investigating a workplace incident.
2) A disciplinary measure against the employee.

Administrative Suspensions

Administrative suspensions are when an employer decides to suspend an employee while investigating a workplace incident — for example, when allegations of misconduct are brought forth against the employee, or when a criminal proceeding is ongoing against an employee.

During an administrative suspension, the employer must follow the law with respect to how the suspension is executed. The employer cannot place an employee on administrative suspension without pay if the employee is available and willing to work. This means that so long as the employee is at home, awaiting the results of any potential investigation or proceeding, the employer must continue to pay them during this time. The employee can waive their right to be paid on an administrative suspension if they have contractually agreed to this term upon their hire pursuant to an employment contract indicating as such.

The Supreme Court of Canada in the case of Cabiakman v. Industrial Alliance Life Insurance Co. stated that the following are required when placing an employee on administrative suspension:

  1. The suspension must be necessary to protect the legitimate business interest;
  2. The employer must be acting in good faith;
  3. The suspension must be for a relatively short time period for a fixed term; and
  4. Other than in exceptional circumstances, the suspension must be paid.

If you are placed on an unpaid suspension for administrative reasons where your employer is refusing to pay you, you are able to refuse the suspension and this would not be construed as a resignation but rather a constructive dismissal.

In 2018, Ontario’s Court of Appeal considered the issue of suspensions, in the case of Filice v. Complex Services Inc. This case involved a casino employee who was suspected of theft. He was placed on a lengthy suspension without pay while under investigation. The employer had a formal policy that permitted suspensions during an investigation, so that was part of the employee’s contract. Nevertheless, the court found that the employer should have had stronger grounds before putting the employee on suspension without pay.

The Court acknowledged that there “may be situations where an employer would be fully entitled to suspend an employee without pay given the nature of the allegations made. However, those situations must be viewed as exceptional, and in any case, it still falls to the employer to justify that decision as a reasonable one.”

Here, the employer made the mistake of believing that a suspension without pay would be automatic without taking the steps to justify it. Therefore, it was considered a constructive dismissal, and the employee was awarded damages. Employers should seek expert legal advice prior to instituting a suspension without pay.

In the case of Potter v. New Brunswick (Legal Aid Services Commission), the Supreme Court of Canada elaborated further on when an administrative suspension is and is not reasonable under the law. In this case, the employee was placed on a lengthy paid suspension and was never provided with a reason. After 8 weeks, nothing had happened, so the employee commenced an action for constructive dismissal.

Following the commencement of this action, the employer argued that he had resigned so they ceased his salary and benefits. The Supreme Court found that this suspension without providing a reason was so severe that it was reasonable for the employee to conclude that he had been constructively dismissed. The Court held that even if there is an implied power in the contract to place employees on suspensions, this does not give the employer the right to do it for any reason, and there must at least be some business reason to justify the suspension. 

Disciplinary Suspensions

Disciplinary suspensions can occur when an employee has committed misconduct, as a form of punishment if there is just cause to do so. Again, this form of suspension can only be unpaid if there is an express term in the employment agreement that the employee signed allowing for the measure to be taken unpaid.

The disciplinary suspension cannot go so far as to sever the employment relationship, otherwise, the employee may have a claim for constructive dismissal.

On the other hand, if the misconduct is serious enough, the employer may have just cause to permanently dismiss the employee without compensation. The employer who chooses to only suspend such an employee without pay may in fact be acting leniently. This means, if the intentional misconduct could amount to termination for cause, or just cause for termination, an unpaid disciplinary suspension may be reasonable and defensible under the law. Examples of behaviour that amounts to just cause for termination include theft or fraud. You should consult an employment lawyer if you are in such a situation, to help evaluate your options.

Workplace Suspensions General Assessment

In general, suspending an employee is permissible if all express and implied terms in the employment relationship are followed satisfactorily. It is important to expressly allow for an unpaid suspension in an employment contract or policy should an employer wish to exercise this tool instead of terminating the employee and the suspension must be in the interest of the business.

Additionally, the Courts often look at whether the employee had the opportunity to appeal the suspension to someone who is not the manager or supervisor who imposed the suspension in the first place, such as a senior manager or executive. Failing to allow for this may render the suspension a constructive dismissal, wherein the employee may claim notice for the termination of their employment and the potential for any unpaid wages during the suspension period.

A clear and well-drafted employment agreement or workplace policies and handbooks regarding suspensions will provide both the employer and employee with information on their rights should the issue ever arise.

If you are unsure of your rights regarding a suspension from the workplace, contact Monkhouse Law today for a free 30 minute phone consultation.

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