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Employee whose contract is frustrated by terminal cancer entitled to termination and severance pay

frustration-of-contractIt is clear from the relevant statutory and regulatory provisions under the Employment Standards Act, 2000 (the “Act”) that an employee whose contract is frustrated on account of illness or injury is entitled to both termination pay and severance pay. An employment contract is frustrated when the employee will be unable to perform the basic tasks associated with his job for the reasonably foreseeable future.

However, where employment ends as a result of the employee’s death, this entitlement no longer exists.

In a recent case before the Ontario Superior Court of Justice, the court was required to determine whether the contract of an employee, who was diagnosed with terminal cancer and later succumbed to his illness, was frustrated as a result of the illness or terminated due the employee’s death.

In this case, the plaintiff, Mr. Drimba, began working for the defendant, Dick Engineering Inc., in 1996. The defendant operated a full service engineering design firm. In June, 2013, Mr. Drimba was diagnosed with terminal cancer, and advised his employer that he would be commencing a leave of absence.

The following month, Mr. Drimba was advised his employer would be selling its assets to KSH-DEI Solutions Inc. The sale officially took place September 1, 2013; however, the defendant continued to operate in order to complete commitments to clients. The defendant confirmed in writing to Mr. Drimba that when he was well enough to return to work, the defendant would arrange for Mr. Drimba to have an interview with KSH-DEI Solutions Inc.

By August 27, 2013, the defendant was in the process of filing a claim for long term disability, as well as a claim for critical illness, but because he was on sick leave, Mr. Drimba was not offered employment by KSH-DEI.

On September 17, 2013, Mr. Drimba died.

Marty Rabinovitch, counsel for Mr. Drimba’s estate, argued that his contract of employment was frustrated by the illness. Because of the seriousness of his illness—being terminal cancer—it was highly unlikely that he would ever resume his employment. At the time of the diagnosis, it became highly unlikely that Mr. Drimba would return to work, therefore the contract of employment was frustrated.

The defendant argued that Mr. Drimba’s employment contract was severed by his death, and as a result, his estate was not entitled to termination pay or severance pay under the Act. The defendant countered that it not only did never terminate Mr. Drimba’s employment, but that Mr. Drimba had the intention to return to work up to the date of his death.

The court ultimately decided that Mr. Drimba’s contract of employment became frustrated at some point between the time of his diagnosis and the date of his death. In the court’s view, it must have been apparent to the defendant that, as a result of the severity of Mr. Drimba’s illness, it was highly unlikely that he would ever return to his employment, notwithstanding the generosity of his employer to keep his position open for him in the event that he recovered. As a result, Mr. Drimba’s estate was entitled to both termination pay and severance pay.

For further information or assistance in regards to any issue in employment law or under the Employment Standards Act, please contact one of our Employment Law lawyers.

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Devry Smith Frank LLP

Employment and labour lawyers at Devry Smith Frank LLP
Devry Smith Frank LLP (DSF) is the largest full service law firm in Toronto outside of the downtown core. They offer a broad range of legal services to individual, business and corporate clients in most areas of corporate and personal law. Their firm’s employment law group covers a broad spectrum of HR law, including employment and labour law, occupational health & safety, human rights, workers’ compensation and much more.Lawyers at Devry Smith Frank LLP lead by Marty Rabinovitch B.A.H., LL.B. will be covering issues surrounding employment and labour law and human rights on First Reference Talks. They also provide training, seminars and conferences on the above topics. Read more .
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