Most employers are familiar with employee’s rights under the Ontario Human Rights Code. Many of these rights are well known and fairly obvious. For example, employers must not terminate their employees on the basis of their disability. Similarly, where employers are aware of an employee’s disability, they must accommodate to the point of undue hardship.

But what do you do with an employee who is permanently disabled and cannot complete any of the requirements of their position? How far does an employer’s duty to accommodate actually go?

The Ontario Divisional Court recently revisited this question in Katz et. al. v. Clarke, 2019 ONSC 2188.

The Respondent was a former employee of the Appellant, the Katz Group Canada Ltd., which operates Pharma Plus and Rexall locations in Ontario. The Respondent was off of work, initially due to depression and later due to a personal injury.

Unfortunately, the personal injury was extensive and prevented the Respondent from returning to work. The Respondent was unable to stand, sit, or even leave his home for extended periods of time. Going to work was entirely out of the question. His doctor found that there was no job the Respondent would be able to perform.

The Respondent was absent from work for five years and gave no indication to the Appellant when and if he would be able to return to work. Accordingly, the Appellant decided to terminate the employment relationship.

Long story short: the Respondent commenced litigation, arguing that the Appellant had terminated his employment based on his disability and failed to take any steps to accommodate him. The Respondent’s position was he wanted to return to work. The Appellant disagreed and argued that the contract was frustrated.

What is Frustration of Contract?

Very simply, the doctrine of frustration holds that where unforeseen circumstances render the execution of a contract virtually impossible, the contract will be frustrated and is terminated.

The Appellant argued that because of the Respondent’s medical condition, it was virtually impossible for him to complete the essential duties of his employment. Given his condition, there was no possible way for the Appellant to accommodate, even if the Respondent actually wanted to return to work.

Employers can breathe a sigh of relief. The Divisional Court agreed with the employer. The Court held that the doctrine of frustration applies to employment cases when there is evidence that an employee’s disability is permanent and prevents the employee from performing the essential duties of the contract.

But What About the Duty to Accommodate?

The Divisional Court held that the duty to accommodate must necessarily end when the employee can no longer fulfil their basic obligations for the foreseeable future. In essence, it is impossible to accommodate an employee who is unable to work.

This applies even if an employee lets you know that they want to come back to work. The Court stated it’s not enough for an employee to simply want to return to work. The employee must also demonstrate that they have the ability to do their job. As the employer, you are entitled to receive medical information to this effect. Once ability is established, however, the employer’s duty to accommodate will be triggered.

This decision is positive news for employers dealing with employees with permanent injuries who can no longer complete the basic duties outlined in their employment contract.

However, as a word of warning: employers should proceed cautiously. The doctrine of frustration will not apply to every case. Remember, the facts of the present case were quite extraordinary. The employee in question had not attended work in five years and was unable to leave his house. There was medical evidence that showed he was unable to return to work (any form of work) and would not be able to do so in the future. There was a lot of evidence establishing that the employer could do nothing to continue the employment relationship.

While we agree that an employee who is unable to work is impossible to accommodate, this will not be the case in most situations. Consequently, not every disability will render an employment contract frustrated. More likely than not, taking this position will result in litigation, which can be protracted and expensive. Before taking any steps to terminate an employee with a disability, we recommend extensively documenting all steps taken to accommodate and obtaining legal advice.

At Mills & Mills LLP our employment lawyers advise and represent clients with a variety of issues, including drafting and interpreting employment contracts. To learn more about how we may be able to assist you please reach out to us online or by telephone at (416) 863-0125.

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