Navigating medical leaves for executives

As pressure builds for companies to post strong results in the face of mounting competition, executives often find themselves exhausted, frustrated, strung out — or worse — and in need of rest and/or medical attention. Medical leaves of absence raise a number of legal concerns affecting executives that in-house counsel should be aware of.

D&O insurance
D&O insurance policies often require that insurers be provided with written notice when officers or directors take a leave of absence. Legal counsel should enquire whether coverage of the absent director or officer is affected in any way.

Leave benefits
Executives may have difficulty ignoring work while on leave, succumbing to the temptation of responding to emails, jumping in on meetings, etc. Their continued involvement in work may cross the line and jeopardize their entitlement to leave benefits.

The Canada Business Corporations Act and Ontario Business Corporations Act provide, respectively, that an individual is disqualified from being a director if he or she has been found under the Substitute Decisions Act, 1992 (Ontario) or under the Mental Health Act (Ontario) to be incapable of managing property or been found to be incapable by a court in Canada or elsewhere, or he or she is of unsound mind and has been so found by a court in Canada or elsewhere. Absent such a determination, executives who are on leave remain directors of the company, meaning that they have an ongoing fiduciary duty and duty of care to the corporation and their statutory obligations continue. In such cases, they will probably wish to be aware of all board matters, receive and review board materials and attend board meetings to the extent they are able to. This could present a problem where the director is challenged by health issues, particularly mental health issues. Corporate governance might dictate in such circumstances that the director not actively participate in board matters. It would be prudent for boards to have a policy concerning directors taking leaves of absence.

There are some technicalities one should also be aware of. Absent directors are technically still “in office” and, therefore, should continue to count in determining whether a quorum is present at meetings of the board and any committee of which she or he is a member. Directors who fail to attend meetings are deemed to have consented to resolutions that were passed unless they provide their dissent within defined time periods after becoming aware of the resolutions.

Return to work
Companies should remain in close contact with executives while on leave, enquiring whether they are in need of support from the corporation and make basic enquiries regarding their return. It would be wise not to enquire too often because the executive might sense that he or she is being pressured to return to work.

Executives are entitled to their same jobs upon their return, unless there are any physical or mental limitations on their ability to perform their responsibilities, in which case the employer must modify their duties by providing the executive with reasonable accommodations to the point of undue hardship. Undue hardship is generally accepted to mean that employers have to show their business would suffer overwhelming harm or loss as a result of not terminating the executive. What many employers don’t appreciate is that this is an onerous burden as the legal threshold to prove undue hardship is extremely high. Prudent employers need good counsel on their side to navigate their obligations.

When requesting leave, employees typically provide employers with a hand-written doctor’s note scribbled on a pad allegedly approving their leave from work for a defined period of time. Many times these GPs are simply relying upon what the employee has told them and have not independently questioned or examined the patient. Before accepting the executive’s return, employers should seek more detailed medical documentation from a physician identifying the actual limitations and functionalities of the employee and consider having that employee attend an independent medical assessment to substantiate the alleged illness. Employers have an obligation to inquire what limitations are and employees have a matching obligation to make the employer aware of them. 

Medical information should only be shared, within the workplace, on a need-to-know basis and must be kept confidential. It would be wise to create a new file for the employee and to keep it separate from the executive’s personnel file in an extra-secure location.

Prognosis not diagnosis
Employers are entitled to request that the physician provide details of how the condition may impact the executive’s ability to perform his or her job. That could entail asking whether the executive will need ongoing medical attention and its general nature, and how the ailment or illness may be expected to unfold. Employers are not entitled to and should never request a diagnosis because diagnoses are protected by health legislation.

Ongoing monitoring
Once the employee has returned to work, it would be prudent to periodically evaluate the effectiveness of the accommodation measures. Legal counsel and/or the human rights department should enquire whether they are able to work productively and if any of the accommodation measures need adjustment.
It would be useful to solicit feedback from co-workers to find out whether they are able to manage any reassigned or additional job duties.

Leave of absence policy
Employers should seriously consider having a medical leave of absence policy, which tracks its obligations under employment law and corporate governance considerations. Executives and employers should both be aware from a reading of the policy that they have shared obligations and how it is expected that they will interact with each other, as well as with medical professionals and fellow co-workers. Such policies often provide for the option to appeal a decision to a higher level in the organization. Employees should be made aware that if they have any unresolved material concerns they also have the right to take their concerns to the Canadian or Ontario Human Rights Commissions.

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