Employer Costs for Long-term Illness Leave in Ontario

Changes to the Ontario Employment Standards Act, 2000 (ESA 2000) created a new unpaid job protected long-term illness leave for employees who are unable to work due to a serious medical condition. These changes were brought about through Ontario Bill 229, Working for Workers Six Act, 2024, and will come into effect in June, 2025.

The leave supports employees with serious medical conditions so that they can take time off work to focus on their health without worrying about their jobs. Although Ontario employers already have a duty to accommodate employees with a disability (often with a medical leave of absence) pursuant to the Ontario Human Rights Code (OHRC), there may be some significant cost implications to this leave related to employee benefit plans that employers should be aware of.

Eligibility and notice

To be eligible, an employee must have been employed for at least 13 consecutive weeks. They must notify their employer in writing that they intend to take the leave as soon as possible.

They also need to provide a medical certificate (upon request) from a qualified medical practitioner. This is a physician, registered nurse, or psychologist in the jurisdiction where care is provided. The certificate must state that the employee has a serious medical condition (including chronic and episodic conditions) and set out the period of absence.

Length of leave

The total amount of leave available is up to 27 weeks over a 52-week period, even if an employee has more than one condition. This corresponds with the extension of Employment Insurance (EI) sickness benefits from 15 to 26 weeks in December, 2022, plus the one-week waiting period for EI benefits.

Long-term illness leave must be taken within 52 weeks from the earlier of the first day of the week in which a certificate was issued, and the first day of the week in which the employee was not performing their duties because of a serious medical condition. Note that an employer may count any part of a week taken as leave as a full week of leave under this section.

• Short leaves – If an employee’s medical certificate specifies a period that is less than 27 weeks, the employee is only entitled to take the number of weeks set out in the certificate. This means that the leave does not have to be taken all at once, which is helpful for chronic or episodic illnesses.

• Long leaves – If an employee’s medical certificate specifies a period that is greater than the designated 52-week period, the leave ends at 52 weeks – and only 27 weeks of this leave are protected under the ESA 2000 with vacation leave and benefits continuation. The employer may, however, continue to have a duty to accommodate. After the 52-week period has lapsed, the employee may then take another 27 weeks of leave if eligible on provision of a new medical certificate.

Leave extensions and additional leaves

If an employee continues to experience a serious medical condition after returning to work–but before the end of the designated 52-week period–they can take an extension of the leave or a new leave if they provide an additional medical certificate with a new period of absence.

Subject to the duty to accommodate under the OHRC, the total amount of combined long-term illness leave cannot exceed 27 weeks within a 52-week period, and the leave extension cannot end later than the 52-weeks after the beginning of the initial leave.

However, if an employee still has a serious medical condition after the designated 52-week period, they are entitled to take another leave if they are eligible.

Cost of employee benefits during leave

The ESA 2000 requires that during this and other types of leaves covered in the Act, an employee continues to participate in their employment benefit plans, including extended health, dental, pension, accidental death, life insurance, and any other prescribed plan, unless they elect not to in writing.

This means that employers must continue to make their contributions towards an employee’s benefits unless the employee gives written notice that they do not intend to continue their pensionable service or pay their contributions during their period of leave. Given the potential length of this leave, this could be costly for employers.

Employers who have not already reviewed their health, dental and disability plans and policies, as well as collective agreements where applicable, following the extension of EI sick leave to 26 weeks in 2022 may consider doing so to align them with both EI sick leave and Ontario’s new long-term disability leave provisions. In doing so, they should carefully consider the current and future cost implications and affordability of any changes to their plans.

Pensionable service

Another issue for employers to consider is pensionable service. Whether time on this leave will be pensionable depends on the terms and conditions of the employee’s pension plan.

There may be a limit to the amount of time on leave that will automatically count as pensionable service in their plan. Employees may have the option to count additional time on leave as pensionable by notifying their employer in writing of their choice to continue making pension contributions while on leave.

There is also a limit in the Income Tax Act of five cumulative years of leave without pay (for leave taken after 1990) that can be counted as pensionable service. Employees can also count up to three additional years of child-care leave. Once an employee reaches the maximum, all further periods of leave are non-pensionable.

An irrevocable pension adjustment is calculated and reported to the Canada Revenue Agency (CRA) by the employer for all pensionable leave without pay periods. The pension adjustment amount reduces the contribution room, or the amount an employee can deposit tax free to an RRSP for a given year. Employees should be made aware of this before they decide whether to continue their pensionable service and contributions during their leave.

Our employment lawyers can help

Perley-Robertson, Hill & McDougall LLP’s employment lawyers are available to assist employers in preparing for these legislative changes that will come into effect as of June 19, 2025.