When suspension is a disciplinary measure, it is almost always unpaid and can be a perfectly valid response to issues such as unacceptable conduct. But…
When the suspension is administrative rather than disciplinary, the employer’s obligation to pay the employee usually remains. In the landmark case Cabiakman v. Industrial Alliance Life Insurance Co., 2004 SCC 55 (CanLII),  3 SCR 195, the Supreme Court of Canada ordered the employer to pay the respondent $200,000 plus interest. Ouch! So where did the employer go wrong? And are you doing the same thing?
- Cabiakman had been employed with Industrial Alliance for three months when he was arrested on criminal charges of extortion (not related to his work).
- Industrial Alliance suspended him without pay.
- Cabiakman was acquitted and reinstated in his job after two years.
There were two issues considered:
- Was the suspension justified?
Employers have the right to protect the interests of the company but must prove the decision to suspend someone is “fair and reasonable”. Understandably, Industrial Alliance wanted to protect their image and customers so the Court determined that the suspension was indeed justified. So far, so good…
- If justified, should it have been paid or unpaid?
Mr. Cabiakman was eventually acquitted and reinstated in his job. The problem remained however, that he had not been paid for two years. The decision to find in favour of the appellant was based on the fact that his suspension was not disciplinary, but administrative. While his criminal case was being resolved, the employer had an obligation to pay him, suspended or not.
Are you doing the same thing?
Maybe you don’t have someone who is being charged with a criminal offence, but do you have employees who have been suspended pending any kind of investigation? For example:
Jane reports that Frank has been sexually harassing her. Is suspension justified? Yes. You have a legal responsibility to protect your employees from bullying and harassment. Considering the seriousness of the charge, it may be tempting to suspend John without pay. Don’t. Jane may have fabricated the story and until you can determine his guilt or innocence, you must pay him. If your investigation reveals that Jane told the truth, you may then consider discipline or dismissal.
If you have questions about a particular situation, feel free to reach out. I will be happy to provide some guidance and support.