New Client Policy Results in Frustration of Employment

If you are an employer in the service industry, and your largest client introduces a new rule or policy that imposes new requirements on your employees, and if one of your employees refuses to comply with that new rule or policy, has the employee’s contract of employment been “frustrated” or must the employer allege that it has “cause” for termination?

In Croke v. VuPoint System Ltd, 2024 ONCA 354 (CanLII), the Court of Appeal for Ontario upheld a decision in which it was found that an employee’s refusal to comply with his employer’s client’s rule requiring proof of vaccination against Covid-19 was a frustration of contract.

This is case about Covid-19 vaccination, which is not about Covid-19.

Frustration of Contract Can be Resolved by Summary Judgment - Does Not Require A Trial

Is a stated “desire” to return to work, at some point, and without more information, sufficient to rebut the medical evidence that a contract of employment has become legally frustrated?

In Katz et al. v. Clarke, 2019 ONSC 2188, the Ontario Divisional Court held that was not.

Frustration Does Not Require an Act of an Employer

Does frustration of contract for illness or injury require an act of an employer?

In Hoekstra v Rehability Occupational Therapy Inc., 2019 ONSC 562 (CanLII), Justice Alissa K. Mitchell of the Ontario Superior Court of Justice ruled that it did not.

In the same decision, the court ruled that the simple failure of the employer to pay the dismissed employee his minimum statutory entitlements on termination was not enough to trigger an award of punitive damages.

Receipt of LTD Evidence of Frustration

Is the continued receipt of long-term disability (“LTD”) benefits evidence that one’s contract of employment has become legally “frustrated”? In the case of Roskaft v. RONA Inc., 2018 ONSC 2934 (CanLII) the Honourable Justice Andra Pollak said yes.

Div Court Finds No Frustration of Contract after 29-Month Disability Leave; Upholds Awards of Human Rights Damages and “Punitive” Costs

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Some decisions are just textbooks on employment law. They are ‘must read’ decisions for anyone looking to practice in this area. Boucher v Black & McDonald Ltd., 2016 ONSC 7220 is a key example of how to approach the following subjects: long-term absence; frustration of contract; human rights damages; and off-set of benefits for the receipt of long-term disability benefits.

The facts of the case are easy to understand and the statement of law is first-principles stuff. For anyone wondering what to do with an employee who has been absent from employment for a considerable period of time, here is a lesson in what not to do.

Dead Employee Still Entitled to Severance: Judge

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If an employee dies due to a terminal illness (e.g. cancer), is his estate entitled to severance pay?

In the case of Estate of Cristian Drimba v Dick Engineering Inc., 2015 ONSC 2843 (CanLII), the Honourable Justice Douglas K. Gray of the Ontario Superior Court of Justice held that it is.

Death may put to an end many things, but an employee’s entitlement to severance pay would appear to not be one of them.

Former Employee's Wrongful Dismissal Case against US Embassy Continues

Sandra McDonald’s legal saga against the Embassy of the United States at Ottawa is a long and interesting story. On July 17, 2012, Ms. McDonald, a former employee of the embassy, obtained default judgment in the amount of approximately $250,000.00 against her ex-employer after it failed to defend her wrongful dismissal case.

The judgment received a fair amount of media attention at the time. Although, even then, at least one Ottawa employment lawyer was sceptical; telling the Toronto Star , “Good luck to her. The U.S. Treasury is already in debt to the tune of $13 trillion.”

Less well publicized is what has happened since. As expected, Ms. McDonald has not seen her money. However, rather than simply ignore the judgment, the US Embassy has, in fact, responded to the case.

HRTO: Frustration is not Discrimination

Can an employer in Ontario legally fire someone who gets injured at work and then, as a result, becomes unable to work? According to a case from the Human Rights Tribunal of Ontario, Gahagan v. James Campbell Inc., 2014 HRTO 14, the answer is: yes, as long as you can demonstrate an inability to accommodate that person in employment and that it is clear that the employee will unlikely be able to ever work again.

Ontario Human Rights Damages to Dismissed Breast Cancer Employee Affirmed

One may recall the story of Elsa Torrejon, who in 2009 was fired from her employer, Weston Property Management, after disclosing that she had breast cancer. The Ontario Human Rights Tribunal ordered Weston to pay Ms. Torrejon $20,000 in general damages for injury to dignity, feelings and self respect and $2,640 in special damages for loss of employment income.

Now, if Weston’s behavior was not bad enough – terminating an employee simply because she discloses a diagnosis – Weston sought judicial review of the Tribunal’s decision from the Ontario Divisional Court. In reasons for decision released March 30, 2012, 1147335 Ontario Inc., o/a Weston Property Management v. Torrejon, 2012 ONSC 1978 (CanLII), Justices Jennings, Kent and Sanderson affirmed the Tribunal’s decision awarding a further $7,000 in costs.

Deducting WSIB from Wrongful Dismissal

One of the joys of being a “lawyer for the suddenly unemployed” is that one gets to work in the field of overlapping insurance policies and acronyms: LTD, CPP, WSIB, EI, and occasionally SABS. While issues concerning the deductibility of various payments from other entitlements is often enough to make one reconsider his career choice, a recent decision from the Ontario Superior Court does supply some clarity with respect to the issue of an employer’s right to set of WSIB (Workplace Safety & Insurance Board) benefits as against wrongful dismissal damages.

In a decision welcomed by employers’ counsel (see others’ commentary here and here) the Honourable Justice Roland Haines, in his reasons for decision in Jensen v. Schaeffler, 2011 ONSC 1342 held that an employee’s receipt of WSIB income replacement benefits was to be deducted from her common-law, but not statutory, wrongful dismissal damages.

Employer Cannot Dismiss CLC Employees Absent Due to Workplace Injury

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In an earlier post, I commented on the effect of O.Reg 288/01 on the doctrine of "frustration" with respect to employment contracts governed by the Ontario law. However, not all employees who work in Ontario are governed by the Ontario Employment Standards Act, 2000. However, some people working in Ontario are governed by the Canada Labour Code (the "CLC").

In an Ontario Labour Arbitration Award, Kingsway Transport v Teamsters, Local Union 91 (John Sears Grievance), 2012 CanLII 20111, Arbitrator Lorne Slotnick held that section 239.1 of the CLC forbade an employer from terminating the employment of an employee who had been on disability for 21 years.

Frustration of Contract need not be Frustrating

Many employees who become chronically ill, are injured in a workplace accident, or get hurt in some other type of accident and are unable to return to work for medical reasons often believe that they have no option but to quit their job. By the same token, it is not uncommon for employers to take the position with their employees that the employee must either return to work or quit.

However, as this post will demonstrate the forced options of “return to work or quit” are, in fact, a false dichotomy. Employees have other options and employers have further responsibilities.