Accounting for Law
Employment & Labour

Frustration of contract claim best left for lawyers: Zeilikman

A person should always consult with counsel if their job is terminated because the employer claims their contract has been “frustrated,” says Vaughan labour and employment lawyer Arthur Zeilikman.

Zeilikman, principal of Zeilikman Law, says frustration of a contract occurs when an event — most commonly an illness or injury — makes it impossible for the worker to perform their required obligations or radically changes them. 

But, he says, determining a frustrated contract is a “context-based assessment” that takes many factors into account, including length of employment and the responsibilities of the job.

Tribunals and statutes, along with jurisprudence, have been piled upon common law, which makes the field “a fast-paced, evolving body of law that has been rendered more complicated,” he tells AdvocateDaily.com.

“The proverbial answer to whether a contract has been legally frustrated is it depends on the context and details of the situation,” Zeilikman says.

“Sometimes an employee becomes severely disabled and is unable to fulfil their essential duties. The question becomes at what point can the employer treat the contract as being frustrated?”

And that’s where it gets complicated and legal counsel should be consulted for proper guidance, Zeilikman says.

While there is no fault to any party in a frustration of contract, he notes the Employment Standards Act lists exceptions for injury or illness.

“If there is a frustration, the employer would not be liable under the common law,” Zeilikman says. “But he would still have to pay whatever statutory obligations he would have even if it’s because of a disability.”

He says the onus is on employers to prove that the contract has been frustrated, but there is no set time frame for when they can make that claim.

“That is the million-dollar question,” Zeilikman says. “There’s no specific time or formula for it. It depends on a variety of factors. For instance, is the disability temporary or permanent?”

He says the time required for an employee to recover and the importance of the assigned job duties are factors to consider.

“Employers also have an obligation under the Human Rights Code to accommodate employees as well,” Zeilikman says. “It’s not a mere question of common law frustration. It also considers whether the employer acted to the point of undue hardship by respecting your leave of absence.

“There’s an interplay with these concepts,” he says. “It absolutely is a complicated affair.”

Zeilikman says counsel should be consulted if a frustration of contract is claimed — regardless of which side you're on.

“What often happens is that long-time employees who are on leave get a letter from their employer claiming the contract has been frustrated and they are offered the minimums,” he explains.

“Don’t sign a release. Go talk to an employment lawyer, because if the contract has not actually been frustrated, you’re looking at a very big difference in terms of compensation,” Zeilikman says.

"The same applies to employers. If you're dealing with a disabled employee, be sure to obtain legal advice to minimize liability." 

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