How does administrative leave work in Canada?

During administrative leave, an employer temporarily relieves an employee of their duties but continues to provide their regular pay and benefits. When used properly, this type of leave can be an important tool for employers when dealing with problematic employees – but there are several factors to consider.

In this article, employment law experts give us a walkthrough on the role administrative leave plays in ensuring safety in the workplace. They will discuss how this type of leave works and how it can be implemented effectively.

If you’re an employer or an HR professional wanting to gain a deeper understanding of what your obligations are when placing an employee on administrative leave, this guide can help. Read on and learn how you can navigate this often-complex area of labour and employment law.

What does administrative leave mean in Canada?

When an employer puts an employee on administrative leave, they are essentially relieving the worker of their duties, usually for a set period. This can happen after an allegation is made or a complaint is filed against the employee. The worker continues to receive their pay and benefits while human resources investigate to determine if the complaint or allegation is valid.

Requiring an employee to take administrative leave can place an employer in a “dicey situation,” according to employment law experts Thomas Gorsky and Leah Simon.

“On the one hand, administrative leave may be necessary where the alternative — allowing the employee to remain in the workplace — would be disruptive or even risky for the business,” the lawyers explain. “On the other hand, an administrative leave of indefinite duration can expose an employer to the potential for a constructive dismissal claim.

“The truth is, a properly planned administrative leave can be an invaluable tool for an employer. It can provide precious time to conduct a workplace investigation or complete ongoing negotiations while the employee is out of the workplace.”

Gorsky is a management-side employment lawyer at Sherrard Kuzz LLP. Simon is currently the vice-chair of the Human Rights Tribunal of Ontario and formerly a lawyer also at the specialist law firm. Both previously contributed expert articles to Canadian HR Reporter.

Why would someone be put on administrative leave?

There are several reasons why employers may place workers on administrative leave, including:

Workplace safety and security

The most common reason why employers put employees on administrative leave is to protect other staff and the company’s resources. While the root cause varies, this type of leave often involves allegations of misconduct. This, in turn, poses a risk to the safety and security of the workplace.

Employers can also use administrative leave on an employee who has access to secret or protected data, especially if the information is related to an upcoming court case. This protects both the employee and the information they hold until the case is resolved.

Ongoing investigations

If an employee is being investigated for misconduct or other workplace issues, it’s best to put them on administrative leave. This lets the employer conduct a fact-finding investigation without any interference from the accused worker. It also ensures that the employee can’t access any documents or information related to the investigation.

Disciplinary action

Administrative leave can serve as a precursor to disciplinary action. Employers considering disciplinary action against a worker may put the employee on leave while they collect evidence and determine the appropriate response.

What are the rights and obligations of employees placed on administrative leave?

Before putting employees on administrative leave, employers and human resources professionals must be aware of the worker’s rights and obligations. This helps the process go more smoothly and avoid any legal complications.

Employee rights during administrative leave

After being placed on leave, the employee retains the right to:

• keep being paid and receiving benefits while still employed
• be treated the same as other employees who have taken similar actions
• not be subjected to any form of retaliation or harassment while on leave
• not be the subject of defamation or false statements made to third parties
• maintain their parental responsibilities, including dropping off and picking up children from school and attending school events

Obligations of employees while on administrative leave

Employees need to meet their obligations while on leave, including:

• remaining available for contact with their employer
• cooperating with the investigation
• responding promptly to any requests from their employer
• avoiding discussing the details of the investigation with other employees or anyone outside the company

Potter v. New Brunswick Legal Aid Services Commission: a case on administrative leave

To illustrate the importance of a well-planned administrative leave, Gorsky and Simon considered the case of Potter v. New Brunswick Legal Aid Services Commission. Here’s what they wrote:

David Potter was the executive director of the New Brunswick Legal Aid Services Commission. The commission had significant performance issues with Potter, which became more serious when harassment complaints were filed against him. Ultimately, the commission decided to terminate Potter’s employment. This led to negotiations aimed at securing his voluntary departure in exchange for a severance package.

During the negotiations, the commission began preparing for a formal investigation into the harassment complaints against Potter. However, before the investigation started, Potter went on disability leave. During his leave, negotiations continued on the terms of his departure, hoping that an agreement would be reached prior to Potter’s return.

Unfortunately, negotiations did not conclude as quickly as hoped. Shortly before Potter’s scheduled return to work, the commission directed him to remain at home, with full pay and benefits, until further notice. He was placed on administrative leave. The commission intended to use this additional time to conclude the ongoing negotiations.

Two months later, while settlement discussions continued, Potter filed an action against the commission, claiming he had been constructively dismissed by virtue of his forced administrative leave. Potter relied on a body of case law in where, at least in some circumstances, an employee assigned no employment duties can claim constructive dismissal, even if paid full salary and benefits.

Both the trial judge and the New Brunswick Court of Appeal held that Potter’s indefinite administrative leave did not result in his constructive dismissal.

Administrative leave vs. constructive dismissal

In reaching its decision, the Court of Appeal identified and applied these six factors:

• the duration of the suspension
• whether another individual had been appointed to replace the suspended employee
• whether the employee had been asked for his keys to the workplace
• whether the employee continued to be paid and receive benefits
• whether there was evidence the employer intended to terminate the employee at the time of the administrative leave/suspension
• whether the employer had suspended the employee in good faith — that is, for bona fide business reasons

Considering the first factor, the Court of Appeal found the indefinite duration of the leave did support a finding of constructive dismissal. However, this factor alone was not enough to trigger a constructive dismissal.

The court emphasized the following to arrive at its decision:

• Potter never expressed concern about the indefinite nature of his administrative leave, nor did he seek clarification about its duration
• the suspension was not meant to permanently remove Potter from his job. Administrative leave was implemented for sound business reasons: to give everyone time to negotiate an amicable settlement for Potter’s departure

"Potter v New Brunswick Legal Aid Services Commission: AUDIO Recording (Majority)" - 2015 SCC 10 ~ @LegalListening https://t.co/XjISGMkZCs

— CanLII Connects (@CanLIIConnects) March 2, 2021

Supreme Court overturns NB Court of Appeal’s decision

In 2015, however, the Supreme Court overturned the lower court’s decision. The Supreme Court ruled that Potter was constructively dismissed for the following reasons:

• the indefinite duration of his suspension
• the failure of the commission to act in good faith as it withheld the reasons from Potter
• the commission’s concealed intention to have Potter terminated

In an analysis of the Supreme Court decision, Stikeman Elloitt labour and employment attorneys Bruce R. Pollock, Patrick Essiminy, Khalfan Khalfan, and Marie-Lou Gauthier note:

“The Supreme Court explained that where an administrative suspension is at issue, the burden to establish constructive dismissal, which usually lies on the employee, initially shifts to the employer, who must show that the suspension was reasonable and justified.

“If the employer does not meet that burden, it shifts back to the employee who must then demonstrate that a reasonable person in his situation would have concluded that the suspension was sufficiently serious to constitute a repudiation of contract, or, in other words, that the essential terms of the employment contract were being substantially changed.”

The lawyers add that there are certain factors that help determine whether an administrative suspension is reasonable and justified, including:

• protecting a legitimate business interest
• the employer acting in good faith
• the duration of the suspension
• whether the suspension is with pay

“The Supreme Court held that the suspension was not reasonable and justified,” the lawyers explain in their analysis. “Here, the issue was whether the administrative suspension was based on factors intrinsic to the employee, as opposed to extrinsic factors such as financial difficulties, a shortage of work, technological change, or reorganization of the business. The decision was clear to point out that this was not a decision regarding a disciplinary suspension, suggesting that a different calculation may be required in such a context.

“Since the commission was not successful in proving that the suspension was reasonable and justified, Potter therefore had to satisfy the second requirement, which is to demonstrate that, at the time of the suspension, a reasonable person in his situation would have concluded that the essential terms of the employment contract were being substantially changed.”

According to the decision, a constructive dismissal can take two forms:

• a single unilateral act that contravenes an essential term of the contract
• a series of acts that, taken together, show that the employer intended to no longer be bound by the contract of employment

The Supreme Court concluded that it was reasonable for Potter to perceive the unauthorized unilateral suspension as a substantial change to the contract in that:

• he was being indefinitely suspended and had been given no reasons for the suspension
• the suspension was to continue until further direction from the commission
• when Potter's counsel requested clarification on the commission's instructions, it “persisted in its silence”

According to the Supreme Court, these facts taken together were sufficient to discharge Potter’s burden of proof.

Check out Stikeman Elloitt’s full analysis of the Supreme Court’s decision on the Potter case here.

What factors should employers consider before placing an employee on administrative leave?

If used properly, administrative leave can be an important tool because it can provide an employer with the time needed to follow legally recommended procedures. This can reduce the risk of liability. When thinking of using an administrative leave on an employee, these are the most important factors that employers should consider, according to Gorsky and Simon:

Necessity

“Place an employee on administrative leave only if it is necessary to protect the health and safety of other employees or the integrity of the business. Otherwise, an employer may have difficulty defending the bona fides of its decision.”

Pay the employee

“Whenever possible, continue all forms of the employee’s remuneration throughout the leave period. This is so that the employee is kept 'whole.' While it may be unpalatable, failure to compensate an employee during an imposed leave of absence is likely to be viewed as disciplinary in nature. This will weigh strongly in favour of a finding of constructive dismissal.”

Reserve judgment

“During the leave, avoid pre-judging the ultimate outcome and taking steps that suggest termination is a foregone conclusion. This includes advertising to fill the employee’s position, issuing a record of employment, or any other step suggesting the employer has already decided to terminate the employment relationship.”

Maintain confidentiality

“During the period of leave, avoid discussing publicly or suggesting to others in the workplace that the employee has been or will be terminated. Share information with discretion and only on a ‘need-to-know’ basis.”

Timeliness

“While rushing to judgment is imprudent, moving too slowly gives rise to other concerns. The longer an individual remains on indefinite administrative leave, the more likely the leave could be found to be a constructive dismissal. Take the time necessary to make a reasoned decision, but once the decision is made, act in a timely fashion.”

Sharing her insights on a recent HR dispute, Lynn Iding from Stewart McKelvey emphasized the significance of transparent communication and cultural awareness in mitigating workplace conflicts.https://t.co/hmKdZM0nTd#employmentlaw #termination

— Canadian HR Reporter (@HRReporter) May 28, 2024

Administrative leave FAQs

How long does administrative leave last?

Administrative leave can last anywhere from a few days to several months. The length often depends on the complexity and the outcome of the investigation. Employees who are subject to an investigation may be put on leave until the investigation is complete. They are also required to cooperate with the investigation to achieve a timely resolution.

Do people come back from administrative leave?

Employees placed on administrative leave may return to their jobs if the investigation proves that the allegations against them are unfounded. If the complaint or accusation is found valid, the worker may face suspension, termination, or other disciplinary action.

It’s important for employees to establish clear lines of communication with their employers and comply with the company’s policies and requirements to facilitate their return.

Is administrative leave paid?

Employees who are put on administrative leave continue to receive their regular pay and benefits.

Need help in deciding whether to put an employee on administrative leave?

Deciding whether to place a worker on administrative leave or not can be tricky, especially with all the legal implications that come with it. If you’re looking for an expert to guide you through the process, our Best in HR Special Reports page is the place to go.

In this section, we feature only industry professionals and companies that have been nominated by their peers and vetted by our panel of experts as reliable and trusted market leaders.

Recently, we unveiled our five-star awardees for the Best Employment Lawyers and Law Firms in Canada. By partnering with these legal experts, you can be sure that your business is compliant with the labour and employment regulations in your jurisdiction.

In your view, what are the benefits and drawbacks of placing an employee on administrative leave? Let us know in the comments