Employment contracts can be considered "frustrated"
when an unforeseeable event occurs that makes it impossible to
fulfill the terms of the contract. Where frustration occurs, an
employer can end the employment relationship without any liability
other than what is required under statute. Under Ontario's
Employment Standards Act, 2000, employees are entitled to
statutory termination and severance pay if their employment
contract has been frustrated by injury or illness.
The decision to terminate an employment contract on the basis of
frustration is often challenging for employers as it is difficult
to pinpoint when the contract can be considered frustrated. Where
challenged, these decisions can expose employers not only to common
law damages, but also human rights claims. As a result, where an
employee is on leave as a result of injury or illness, employers
are often advised to wait until a significant period of time has
passed before relying on frustration to end the employment
However, a recent decision of the Ontario Superior Court of
Justice has held that employers may have an obligation to consider
an employment contract frustrated much earlier in an employee's
leave. In The Estate of Christian Drimba v Dick Engineering
Inc., 2015 ONSC 2843, the Court considered the doctrine of
frustration in the context of an employee who was unable to work
due to illness, and passed away shortly thereafter.
Mr. Drimba worked for the defendant for 17 years. In June 2013,
he commenced a leave of absence after being diagnosed with terminal
cancer. Following the diagnosis, the defendant urged Mr. Drimba to
apply for group insurance benefits and confirmed that his
employment would continue until he was well enough to return to
work. On September 17, 2013, Mr. Drimba passed away.
At issue for the Court was whether Mr. Drimba's contract of
employment was frustrated by illness prior to his death such that
statutory termination and severance pay were owed to his estate.
Counsel for Mr. Drimba's estate argued that given the
seriousness of the illness, the defendant ought to have known that
Mr. Drimba would never be able to resume employment. On that basis,
Mr. Drimba's estate submitted that the employment contract had
been frustrated by illness prior to Mr. Drimba's death such
that termination and severance pay under the ESA were owed.
The defendant countered that Mr. Drimba's employment was
severed only by his death and, as a result, no termination or
severance pay was owed to his estate. The defendant submitted that
the ESA contemplates severance of employment as the unilateral
initiative of the employer. In this case, the defendant took no
action to terminate Mr. Drimba's employment having expressly
confirmed that his employment would continue. Further, the
defendant argued that, by submitting claims under the disability
policies available to employees, Mr. Drimba clearly intended that
his employment would continue after his diagnosis.
The Court disagreed with the defendant and held that, although
it was not possible to identify a precise point in time, Mr.
Drimba's contract of employment was frustrated by his illness
prior to his death. Accordingly, Mr. Drimba's estate was
entitled to termination and severance pay under the ESA. The Court
went out to find that, while it was generous of the defendant to
keep Mr. Drimba's position open for him, given the seriousness
of the diagnosis, the defendant ought to have known that Mr. Drimba
would not be returning to work and that the contract of employment
had become impossible to perform.
This decision is concerning for employers in Ontario as it
creates a potential obligation to consider an employment contract
frustrated where an employee is unable to return to work due to a
critical illness. It is important to note however that in its
decision, the Court relied on the employer's knowledge of Mr.
Drimba's diagnosis and the severity of the illness in finding
that the employment contract was frustrated. This result can likely
be distinguished from situations where an employer is unaware of an
employee's particular illness or where the severity of the
illness is not as apparent.
When faced with these difficult situations, employers should
remain mindful of the risks associated with attempting to terminate
an employment relationship on the basis of frustration and consider
each employee's circumstances on a case-by-case basis.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
A former teacher at Bodwell High School has learned a valuable lesson from the B.C. Human Rights Tribunal— it is not discriminatory for an employer to offer child-related benefits to only employees with children.
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.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).