Jackson And Associates
Current Trends

Service Level Agreements

Employers are spending up to 35% of salary on benefits when you include vacations, holidays as well as the insured benefits and pension plans. For insured benefits alone, that include Life insurance, Disability, Health, Drugs and Dental, this can be up to 6% of salary depending on the plan design and the group's demographics. In our view, the plan sponsor should expect quality service from any supplier when they are spending this amount of dollars. While the large Canadian insurance companies are reluctant to do so, a plan sponsor can request a Service Level Agreement (also referred to as a Service Provider Agreement) with other plan administrators and smaller insurers to ensure they get the appropriate quality of service and support.

Key elements of a Service Level Agreement (SLA) include:

  • Define the scope of service - by identifying the services to be provided, a schedule for their delivery as well as their specifications. This can include the timing and content of reports from the plan administrator/insurer as well as the details of a financial agreement for the delivery of service
  • Allocate meaningful penalties - which can include monetary amounts or credits to be applied, e.g. at the next renewal negotiations
  • Identify respective roles in the process - to ensure the plan sponsor meets their requirements on a timely basis, e.g. delivery of updated employee data for addition or deletion of a new Division, which could result in the administrator/insurer missing a deadline
  • Clarify payment terms - to ensure there is agreement for when any penalties will be paid, e.g. at the time of the problem or at the anniversary date of the policy in the case of an insured benefit plan
  • Agree to parameters and timing for changes - to accommodate for changes driven by business issues at the plan sponsor, e.g. addition of a new Division with special requirements or a change in the technology at the administrator/insurer, including the process and timing for both communicating this change and developing a resolution
  • Ensure there is a provision for termination - clearly setting out the consequences, including payments owing

A SLA can add an additional layer of comfort to all parties ensuring everyone understands what their respective roles are and penalties for not adhering to them.

Ontario's Safety Training Requirement - Another Deadline

Ontario employers are responsible for their employees, including supervisors, getting "basic occupational health and safety awareness training" before July 1, 2014.

There are separate training requirements for workers and for supervisors. It is important that all workers take the basic occupational health and safety awareness training and, in most cases, supervisors are taking both that program and the one designed specifically for supervisors although this is not mandatory. In fact, the Ministry's position states that the supervisor will be exempt from the worker training if:

  • The supervisor was performing work as a supervisor for the employer prior to July 1, 2014, and
  • The supervisor completed a basic occupational health and safety training program for supervisors before July 1, 2014.

For supervisors outside of Ontario but who are supervising an employee in Ontario, it is prudent to have them complete the course. In the case of contractors working for an Ontario employer, we suggest they also complete the worker's training course and that the employer revise their contractor agreement to include a clause in which the contractor confirms they have completed the training and that they will provide proof.

The Ministry of Labour has provided online e-learning modules for both the workers and the supervisors which are available at www.labour.gov.on.ca

Age Discrimination in Benefit Plans

The incidence of employees working past age 65 is increasing and, while there has been some changes to eligibility guidelines in insured benefit plans, there remain restrictions on some coverage for individuals age 65 and older. In recent court cases, this is being challenged as age discrimination contrary to the Human Rights Code (one such example is Talos v Grand Erie District School Board).

Under the Employment Standards Act, 2000, the wording currently permits differentiation in employee benefit plans with respect to persons age 65 and older.

Many insurers now provide for coverage for all benefits while the individual is actively at work with the exception of Long Term Disability benefits. Stay tuned however as we suspect changes in this area as the incidence of older employees remaining in the workforce increases.

Terminating an Employee on a Lengthy Disability Absence

This is a very sensitive issue and fraught with peril if not handled correctly. Two questions face employers over this issue:

  • Can an employee be fired who has been away from work for a lengthy period due to an illness or disability ?, and
  • If so, when ?

The employer has the option of terminating based on the doctrine of frustration of contract which allows an employer to terminate the employee without providing any common law notice or pay in lieu of notice. However, if a court decides that the contract is not frustrated, then the employer could face a claim that it has breached the employee's human rights by failing to accommodate their disability.

In a recent court case, Gahagan v James Campbell Inc., the employee was dismissed after being away from work for 2 ½ years. The Human Rights Tribunal sided with the employer and held that "the duty to accommodate does not require an employer to create a job that is not productive or that, in the employer's view, does not need to be done".

Every case has its own set of circumstances and will be subject to whether the employee can return to work in a reasonable timeframe and whether there is the availability of appropriate accommodation