You may recall or already know that the doctrine of frustration of contract exists
You may recall or already know that the doctrine of frustration of contract exists, and intersects with an employer’s duty to accommodate – where an employee has been absent from the workplace for a substantial period of time there may come a point where there is no reasonable or foreseeable prospect of that employee returning. At that point, the employer can take the position that the employment contract has become frustrated and can be terminated. In fact, in July this author wrote about a summary judgment decision dealing with frustration of contract that was favourable for employers.
However, after recently speaking at an event attended by many sophisticated, knowledgeable corporate lawyers and in-house counsel, it was clear that employers still suffer a significant amount of vexation (avoiding the pun) in dealing with the duty to accommodate and determining exactly when frustration of the employment contract has occurred. Accordingly, we provide below a brief summary of points to consider when dealing with absence due to disability, injury or illness. This is not intended to be legal advice – as always, each case must be considered in its own specific context – but rather a guide to asking the right questions in establishing and or following the proper process to manage long-term absences.
1. When an employee is off work for medical reasons, the first place to start is with the duty to accommodate:
- Explore accommodation options for a return to work.
- Can the employee be accommodated without undue hardship?
2. Medical documentation review is necessary – employers should not guess, assume or simply take the employee’s word for what they can or cannot do and/or when they can or cannot return to work:
- Review medical information provided by the employee.
- Request additional medical documentation if prognosis is unclear.
- Whether frustration is (eventually) established is highly dependent on the medical evidence and prognosis provided by medical authorities.
3. Consider the length of the absence:
- How long has the employee been on leave?
- Note that there is no specific time period – nor is there a magic threshold after which it is automatic (like the end of the first two (2) year period an employee is on LTD benefits) – that an employee must be off work for the contract to be frustrated, and it will depend on the circumstances of each case.
4. Level of responsibility should be considered and weighed against a continued absence, in terms of impact on the business:
- How well can the business function without the employee?
- E.g. a senior manager in a small business compared to a clerical worker in a large organization may have a greater impact.
5. Although not determinative, adjudicators have said that the presence or absence of a Disability Benefits Policy may be a factor:
- Is the employee entitled to STD or LTD benefits?
- If so, a longer period of time likely has to pass before frustration will occur.
- However, just because an employee’s benefits have expired does not mean that the employment contract is frustrated – again, each case must be considered on its own merits.
6. Ultimately it comes down to making the call: what is the likelihood that the individual will be able to return to work in the foreseeable future?
- What does the medical documentation say?
- Is it unlikely that the employee will return to work in the foreseeable future, based on an analysis of all of the relevant factors?
- No common law notice or pay in lieu of notice but, generally, an employee is going to be entitled to their minimum termination and severance entitlements under the Employment Standards Act, 2000.
Of course, during all of the above process, the employee must do their part as well: the timely provision of medical information and participation in treatment plans is an integral element of the accommodation process. Failure on the employee’s part is not frustration of contract but rather may well amount to job abandonment, but that approach should only be taken after careful consideration of the entire process and all of the facts, and of course consultation with counsel. For assistance navigating the accommodation process and in ultimately determining whether the employment relationship with an absent employee has reached the point of frustration the CCPartners is ready to help.
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