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Frustration

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One of the more interesting trends in the 2007 case law was a number of cases in which judges considered whether an employee’s contract of employment had become “frustrated” due to illness and disability. “Frustration” is an old legal concept taken from the law of contracts. It sets out the circumstances when one party to a contract can call the contract to an end, without payment of any damages, because the contract has become impossible to perform. Traditionally, contracts have become frustrated when a factory has burned down, when a ship is lost at sea etc.

In the employment law context, there have been cases when an employer has successfully argued that the employment contract has been frustrated when the employee has been ill for a long time, and the prognosis is that he or she cannot return to the workplace.

The interpretation and application of this doctrine has, in recent years, become increasingly difficult given the influence of human rights law, and the notions of accommodation and discrimination and disability in the workplace. A decision released recently, S.D. v. Riva Plumbing Ltd [2007] O.J. No. 3710 (Q.L.) is a case in point. There, an employer was prevented by the Court to conclude that a contract had come to an end when an employee with metastasized breast cancer had been away from the workplace for 14 months. When it removed the employee from its group health benefits, the employee successfully brought an application to have her benefits and employment status reinstated.

For employers, cases like these mean that before taking steps to discontinue benefits, a very careful review of the file must be done to see if the circumstances warrant it. Indeed, there is the suggestion in this case that so long as an employee is receiving disability benefits from the employer’s plan, the employer may never be able to argue that the contract has become frustrated.

Janice Rubin