What is an employer to do if drivers they have hired lose their
license? What if the professionals they employ lose their
accreditation? Is there a requirement to provide notice or pay in
lieu of notice of termination? A recent court decision suggests
that in such cases the contract of employment comes to an end
because it has been "frustrated". There is no requirement
to provide any notice of termination or pay in lieu of notice in
The employee in Cowie v. Great Blue Heron Charity Casino was a
security officer. The law in Ontario was changed in 2007 to require
that security guards had to be licensed. Those working in a casino
had to possess a clean criminal record to be licensed. Those
already employed as security guards were given until August 23,
2008 to get licensed.
Cowie started with the casino in January of 2000 as a security
officer. He had been convicted of an offence in 1983. When the law
changed, as a result of his criminal record he could not get the
security guard license. Soon after the August 2008 deadline, Cowie
was dismissed. He was not given any notice or pay in lieu of
After a trial judge found that Cowie was wrongfully dismissed,
the Casino appealed. The trial judge had awarded eight months'
salary as damages for pay in lieu of the notice of termination. The
appeal court overturned the trial decision.
In its analysis, the appeal court looked at when a contract can
be ended due to "frustration". It considered various
earlier cases where a change in the law had made the performance of
the employment contract illegal. It also considered an earlier
precedent where the conduct of the employee made it illegal to
continue their employment in the same capacity. Specifically, in
one case a nurse who lost her accreditation based on professional
misconduct could no longer legally work as a registered nurse. Such
circumstances had been found to result in frustration of the
Turning to Mr. Cowie, the court noted that the change in
legislation made it illegal for the casino to continue to employ
him as a security guard. The court said that the Casino need not
keep the position unfilled indefinitely (the potential time
required to obtain a pardon for the criminal conviction was two
years). The court concluded that the trial judge was wrong in
finding that the disruption of the contract must be permanent. The
real question was whether the performance of the contract becomes
"radically different" from what the parties had agreed
to. The court found that this was the case and the employment
contract was therefore frustrated.
Application for Employers
There are many circumstances in which a loss of a required
qualification may make it illegal for employees to continue to
perform their duties. Drivers may lose their licenses.
Professionals or tradespersons may lose their certifications. Or
employees' immigration status may suddenly prohibit them from
When circumstances such as these arise, an employer of a
non-union employee may well be justified in terminating the
employee without notice, due to frustration of contract. Note,
however, that this case did not involve a unionized situation. The
result may or may not be the same there.
While the court in this case made it clear that the loss of
qualification does not have to be permanent, it is unclear how
short the duration could be to have the same outcome. Clearly there
are no hard and fast rules. However, this decision confirms that in
the appropriate circumstances a radical change to an employee's
status can lead to frustration of the employment contract.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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