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The end of accommodation? Frustration of the employment contract as a last resort

accommodationOne of the goals of legislation such as the Accessibility for Ontarians with Disabilities Act (“AODA”) and the Human Rights Code (the “Code”) is to promote accessibility and accommodation in various forums, including the workplace. However, when it becomes clear that, despite accommodating an employee to the point of undue hardship, a disabled employee will never again be able to return to his or her job or be accommodated in another position, what can an employer do?

Frustration of contract

Frustration of contract occurs when a permanently disabled employee cannot return to work because the disability makes it impossible for the employee to perform the contract. Put another way, a contract is frustrated where there is no reasonable likelihood of the employee being able to return to work in the foreseeable future.

Although it seems like a simple concept, employers should exercise caution before relying on this doctrine to treat an employment relationship as at an end. Courts do not make findings of frustration lightly, and the onus is on employers to prove that the employment contract has been frustrated.

Where employees have been absent for a long period of time, employers should seek medical evidence, including the employee’s prognosis, to determine whether they are likely to be able to return to work in a reasonable time period. Remember that a disability insurance provider’s assessment is not necessarily determinative, because the plan may use different criteria than a court would apply.

It is also important to note that employers cannot simply rely on “deemed termination” provisions, often found in collective agreements, to prove frustration. Although an agreement may indicate that employment is frustrated when an employee is absent from the workplace for two years, employers must make individual determinations based on the available evidence.

In order for frustration to occur, the event that precludes the performance of the contract must be outside of the parties’ control and unforeseen. Where there are provisions for sickness pay and disability insurance in place, courts are less likely to treat an employment contract as frustrated. Such provisions indicate that disability was contemplated by the contract of employment, and therefore that the contract cannot easily be frustrated by a disability. Courts regularly find that, although employees have been away from work on long term disability for several years, their contracts are not frustrated.

There are factors that make a finding of frustration more likely. For example, where the employment contract is for a fixed term, as opposed to indefinite, courts are more likely to find frustration where there is a lengthy absence with no reasonable prospect of the employee being able to return in the near future. Further, courts are more likely to find frustration where the employee had a key position within the organization that must be filled. Courts are less likely to find that there has been frustration for low-level employees who are not key to the organization.

The takeaway

There are several issues that employers should consider before treating a contract as at an end due to frustration. Employees, especially those who had longer periods of service before becoming disabled, are likely to make claims for wrongful dismissal in attempts to access their entitlement to common law reasonable notice. Such claims can be time-consuming and costly to defend.

Parenthetically, where frustration has occurred as a result of disability, employers must still pay employees their minimum entitlements under the Employment Standards Act.

It would be prudent to consult with an employment lawyer before making the determination that an employment contract has been frustrated. Where employers get it wrong, they are exposed to liability for wrongful dismissal, and potentially for violating the employee’s right to be free from discrimination based on disability.

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Stringer LLP

Employment and Labour lawyers at Stringer LLP
Stringer LLP is a leader in Canadian HR law. For over 50 years, they have taken a client-centered approach to responsive service, representing employers with labour relations and employment problems. Their firm’s practice covers a broad spectrum of HR law, including employment law, occupational health & safety, labour relations and arbitration, human rights, workers’ compensation, pay equity and corporate immigration, as well as issues under the Accessibility for Ontarians with Disabilities Act. They also provide training, seminars and conferences on the above topics. Read more
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