Author: Daniel A. Lublin
Employers are entitled to expect their employees to show up for work. Without a valid reason, employees who don’t show up are subject to dismissal without pay. Temporary illness, however, usually offers that valid reason. But what of the employee who’s disability renders her unlikely to ever return to her job? As Terry Ann Wilmot recently learned, illness is not always a shield from dismissal.
For almost 12 years Terry Ann Wilmot meaningfully contributed to her employer. But then emotional difficulties resulted in long-term absences from work. At first, her employer was accommodating. Wilmot was granted leaves of absence and used her sick leave credits and vacation time to get paid. But when her health didn’t improve, her absences eventually became a problem for her employer. Wilmot was fired for cause and not offered any severance. She had lost her health but argued that she shouldn’t have lost her job.
Wilmot’s employer, Ulnooweg Development Corp. had a different point of view. Wilmot had been ill for 6 months of the calendar year and her diagnosis for return was undetermined. Her illnesses impacted the company’s work and every effort was made to accommodate her illness. Further performance of her employment obligations was impossible, it argued.
Wilmot sued her employer, claiming damages for wrongful dismissal. In defending her claim, the company relied on the legal doctrine of frustration of contract in arguing that her prolonged and indefinite absenteeism rendered further performance of her employment either impossible or radically different from what they had ever agreed to. Frustration, it argued, was tantamount to just cause.
The court disagreed with Ulnooweg. In finding that the contract of employment was not frustrated, the court concluded that Wilmot’s illness was not sufficiently permanent or long-term to have frustrated the contract. Ulnooweg appealed to the Nova Scotia Court of Appeal. It also agreed.
Employers may be able to treat an employee’s contract as at an end if the employee loses the capacity to perform the job because of illness or disability. However, as this case highlights, it is only an illness or disability that is permanent in nature which can frustrate employment and justify dismissal without pay.
Both employers and employees should consider the following advice:
Succeeding with a defence of frustration of contract is an oft-threatened employer tactic that seldom is successful at trial. To establish frustration of contract, a permanent illness must be indisputable and the medical evidence dispositive. A recent British Columbia case found, as an example, that a 2 year absence with dim prospects of return, was satisfactory to meet the test.
The illness’ nature, duration and the prospects of recovery are the most important factors. Employers who proceed to terminate employees without genuinely considering these factors risk violating human rights legislation.
Employment contracts should be thoroughly reviewed. Subject to human rights legislation, an express agreement can oust an employer’s otherwise hefty obligation to pay severance.
Provincial legislation has minimum standards that must always be met. In Ontario, statutory severance pay is mandatory even where frustration is proven. Given the variegated employment standards legislation across Canada, legal counsel should doubtless be sought.