An employee is diagnosed with a
terminal illness. He leaves work in May due to his illness,
his employer sells its business in early September, and the
employee dies of his illness in mid-September.
Within that four month span, perhaps unaware of the gravity of the
illness, the employer advised the employee that he would still have
a job when he was able to return to work. The employer
subsequently informed the employee that he would be able to meet
with the new owners of the business on his return, and they would
determine whether to continue his employment.
The employee's estate sued the
employer for damages for wrongful dismissal which it argued arose
at the time the business was sold. The claim also sought
moral damages for a bad faith termination. In addition, and
what became the most important component of the claim, the estate
also sued for termination and severance pay under the
Employment Standards Act, 2000.
This case, Estate of Cristian Drimba v. Dick Engineering
Inc., proceeded by way of summary judgment before Mr.
Justice Douglas Gray, a former partner of a management side labour
and employment law firm. Justice Gray dismissed the claim of
wrongful dismissal and noted that there was no evidence to support
a claim for a bad faith termination. However, he concluded
that the nature of the employee's illness frustrated the
contract of employment before the plaintiff died. As
a result, he concluded that the employer was obliged under the
Employment Standards Act, 2000 to provide the employee
(and now estate) with both termination pay and severance pay.
Termination pay is
not payable to an employee if the "contract of employment has
become impossible to perform or has been frustrated by a fortuitous
or unforeseeable event or circumstance" (Ont. Reg. 288/01, s.
2(1)12.). This exemption "does not apply if the
impossibility or frustration is the result of an illness or injury
suffered by the employee" (Ont. Reg. 288/01, s. 2(3)).
In this case, Justice Gray concluded that it was evident, even
before the employee's death, that the severity of his illness
frustrated the employment.
Severance pay is
also not payable to an employee if the contract of employment
"has become impossible to perform or has been frustrated"
(Ont. Reg. 288/01, s. 9(1)2.) This exemption does not apply,
however, in the following circumstances:
a permanent discontinuance of all
or part of the employer's business because of a fortuitous or
the employer's death, or
the employee's death, if the
employee received a notice of termination before his or her death;
the impossibility or frustration is
the result of an illness or injury suffered by the employee.
Ordinarily, the employee's
death (if he or she was not previously given notice of termination)
would not trigger an obligation to pay severance pay. In this
case, Justice Gray concluded that the contract of employment was
frustrated before the employee's death.
An employer is in a no-win
situation in a case like this. Aside from the impending sale
of business, the employer may have limited information about the
severity of an employee's illness. This case involved a
rapid deterioration of the employee's health. It is an
undoubtedly emotional and difficult time for the employee and his
family. An earlier termination of the employment might have
triggered a legitimate claim for wrongful dismissal or a claim that
the employer breached the Human Rights Code. It would
ultimately be viewed as an insensitive action when the employee and
his family was most vulnerable.
Other cases involving serious
illness of injury may not occur in such a short window of
time. An employer is wise to consider whether the nature of
an illness, injury or disease is so severe that the contract of
employment has become frustrated. It may have been easier, in
the circumstances of this case and certainly on others, to explore
a mutual agreement that the employment has become frustrated due to
illness and to provide termination and severance pay at a time that
is more advantageous to both parties.
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.
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