Frustration of the
Employment Contract

Terminating an Absent Employee is never an easy decision.

Contact Us

Terminating Absent Employees is never Easy.

When and how do you terminate an employee that has been away from work for an extended period of time?

A common issue that comes up for employers with our Hamilton employment lawyers is asking when they are entitled to terminate an employee who is on disability or who has been away from work for an extended period of time due to illness, injury or chronic disease.  This is typically called the “frustration a contract”. At common law, the doctrine of frustration applies to contractual obligations where making performance of the contract is radically different than what the parties agree to and cannot be considered the fault of either party. Frustration of the employment contract is not the same as just cause for termination. The events that lead to frustration a contract or not a breach of the contract that can be attributable to an employee being blameworthy. Rather, the contract simply cannot be completed. The frustration of contract does most often come up when an employee is sick or hurt, and is absent from work for an extensive amount of time.

Illness, injury, disability & frustration of the employment contract

If you have an employee who has been sick or hurt, suffers a chronic disease and is unable to return to his or her position it’s important that you speak to one of our Hamilton employment lawyers to assist with your frustration issue. An employment contract may in fact and through frustration where an employee’s illness or injury prevents that employee from working. More importantly, there must be no reasonable prospect for the employee to be able to return to work. Whether frustration has occurred typically depends on the anticipated duration of the employee’s illness or incapacity, the duration of employment and the nature of work to be performed.

How do our Courts assess frustration a contract?

There is an analytical framework adopted by Canadian courts which asks whether an employee’s capacity is such that further performance of the employment obligations would be impossible or radically different from what the parties originally agreed to. Courts would typically examine several factors including:

  • the terms of the contract, including provisions for sick pay or disability benefits
  • how long the employment was likely to last had the illness or injury not occurred
  • the nature of the employment
  • the nature of the illness
  • the nature of the injury
  • how long the employee has been absent
  • the prospect of recovery
  • the period of past employment

Does the employer need evidence of employment incapacity?

You as the employer bear the onus of proving the defence of frustration.

As a part of this onus, you are required to collect and rely medical evidence that shows your employee is unlikely to return to work in the foreseeable future. It’s important that you obtain the evidence from the employee and you do not break privacy laws.

It’s important that you do not to confuse the onus by focusing on your employee’s failure to provide you evidence of the ability to return to work. An employee’s failure to cooperate in providing updated medical information will place you in an awkward position of having to rely on the best evidence you in determining the employee’s prospect of return. However, you should always remember that your company bears the burden of proving frustration and take positive steps to collect the necessary medical evidence. If you’re confronted with a very long absence and medical information that is ambiguous or hard to rely on, you should assertively follow up until the prognosis for the foreseeable future is clear or speak to a Hamilton employment lawyer to discuss your options.

How long should an employer wait before considering the contract frustrated?

The overall period of absence is very important, but it is only one factor that is to be considered in determining whether the employment contract has been frustrated by your employee’s injury or chronic illness.

It’s important to note that employers should not rely on the defence of  frustration if there is medical evidence showing future improvement of an employee’s condition, despite a lengthy absence. Evidence of improved condition may preclude frustration, even after an absence of many years.

Some things to look at is whether or not your employee’s medical condition has plateaued and he or she could not be expected to return to work –  or – whether or not there is medical evidence showing there is no reasonable likelihood of return to work in the reasonably foreseeable future. The employer should not set an arbitrary period for evaluating their employees prospects for return to work.

What effect does the frustration of the employment contract have on disability benefits?

This is often a confusing situation for employers.

The mere existence of LTD benefits does not prevent the application of the frustration doctrine. In fact, if the employee has passed the change in definition (COD) at the two-year mark, it’s reasonable to conclude (depending on the facts medical evidence that is particular to each case) that an employee suffers a total disability and is prevented from working in any occupation for which he or she is reasonably suited by education, training and experience. Given the variety of LTD benefit arrangements, the terms of the employment contract and any LTD plan should be reviewed closely to determine their effect on any application of the doctrine of frustration. In other words, speak to a disability and employment lawyer prior to terminated an employee on disability benefits.

How does the obligation to accomodate under the Human Rights Code play into ?

The common law doctrine of frustration typically looks only at an employee’s ability to fulfill job duties the employee was hired to perform. Human rights law requires the employer to accommodate an employee’s disability to the point of undue hardship. This accommodation may require transferring the employer into a new position. This is a separate consideration from determining whether or not frustration a contract is occurred a common-law.

However, similar medical evidence is often relied on to demonstrate both of the following:

  • The employer cannot make further efforts to accommodate disability without undue hardship.
  • The employee’s return to work is not likely in the reasonably foreseeable future.

In some cases, accommodation to the point of undue hardship has been found on the basis that the factors required for frustration of the employment contract have been satisfied.  It’s best to speak to a Hamilton employment lawyer about your situation.

Is severance or a separation payment required if there is found to be a frustration of contract?

Minimum standards legislation in all jurisdictions requires employers to provide employees with notice of termination or pay in lieu. In Ontario, employees whose employment ends due to illness or injury are still entitled to statutory termination entitlements.

Also, in the federal jurisdiction, the doctrine of frustration may have little or no application due to unique employee protections under the Canada Labour Code, R.S.C. 1985, c. L-2: which state that employers are prohibited from terminating employees with work-related illness or injury, despite that the common law criteria for frustration may be satisfied.

Employers in Southern Ontario should speak with our Hamilton lawyer to review any statutory minimum standards exceptions for frustration with care in cases of illness or injury.

Do you have any questions regarding the termination of an employee who has been absent for a prolonged period of time?

If you have an employee that makes further performance of the contract radically different from what you and that employee agree to, you may have ground for a defence to a wrongful dismissal claim or other claims related to employee termination entitlements. Call our Hamilton employment lawyers at 905-333-8888 to speak with us at your convenience. We would be happy to meet and answer any questions you may have.

get in touch with us

Schedule a consultation with one of our
employment lawyers today by filling out the form below, or call us at (289) 203-5991

Employer Practice Areas

Our Location

Lalande Employment Lawyers
  • Address

    105 Main St E #903
    Hamilton, ON L8N 1G6, Canada

  • Phone Number

    (289) 203-5991

Directions

CONTACT OUR EMPLOYMENT LAWYERS

We’re here to help.  Contact us confidentially at (289) 203-5991 or by filling in a contact form today.

  • img
    Serving Terminated Employees Province Wide

    If you've been terminated we can help ensure that you are paid the appropriate amount of severance that is owed to you.

  • img
    Serving Employers Province Wide

    Our Hamilton Employment Lawyers are able to help employers of all sizes - from small businesses to large corporations.

  • img
    Contact us 24/7

    If you feel that you have been unfairly or wrongfully terminated, it’s vital that you act quickly to seek legal advice. Call us today.