Fleet insurance policies, a type of master policy issued by an insurance underwriter, provide blanket coverage to employees or other eligible groups. And those enrolled in the policy must abide by certain terms and conditions to remain eligible for coverage.

Challenges can arise when an employee becomes ineligible for coverage during the course of their employment.

The issue emerged in a Canadian Industrial Relations Board case – Lewis v. Whiteline Trucking — after an employer’s new insurer said they would not cover a driver under the master policy.

The company terminated the employee for just cause due to what they characterized as frustration of the employment contract. But the arbitrator determined that the insurer’s refusal to provide coverage for the employee did not constitute just cause under the Canada Labour Code.

In coming to their decision, the arbitrator noted that the employee’s contract had no provision to require the maintenance of driving insurance eligibility. Termination on such grounds could not be deemed “just”. The employee had therefore been dismissed without just cause and was entitled under the Canada Labour Code to payment of severance.

While decided in the context of a collective agreement, the finding provides some important considerations for employers when entering into employment contracts with their drivers.

If eligibility for insurance coverage under the master policy is an essential or fundamental condition of employment, as it arguably is for anyone hired as a truck driver, then employers should ensure that this requirement is explicitly outlined in the employment agreement. Without this clause in the agreement, an employer may not be able to claim just cause if they are forced to terminate an employee who becomes ineligible for coverage during the course of their employment. The employee may then be entitled to a reasonable notice period or pay.

The decision also outlines the importance of including enforceable termination provisions in employment contracts, which delineate an employee’s entitlement to severance if their employment is terminated without cause.