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Employment & Labour

The duty to accommodate and frustration of an employment contract

By Laura Williams

Appropriately accommodating an employee’s disability is often a challenging task for employers. It is often difficult to determine at what point the accommodation obligation has ended because the employer has accommodated the employee’s disability-related limitations to the point of undue hardship.

Likewise, determining at what point the employment contract has been frustrated by an employee’s disability is a complex, context-specific task. If there is no reasonable prospect of the employee with a disability returning to work with or without accommodation in the foreseeable future, the employment relationship could be considered as “frustrated.” For employers, this means that they could end the employment contract without violating the Human Rights Code [the Code] and only be obligated to provide the minimum termination entitlements under the Employment Standards Act, 2000. However, where an employer prematurely claims frustration of the employment contract and terminates the employment relationship on that basis, the employee will be found to have been wrongfully dismissed and will be entitled to common law reasonable notice as well as damages for a breach of the Code.

A recent Ontario Court of Appeal decision considered both the employer’s duty to accommodate and a claim of frustration of employment.

The decision

In the case, the employee was an orthotic technician who sustained repetitive injuries to his arms and hands in the course of performing the duties of his position. The employee was placed on an unpaid medical leave of absence in August 2010, and his employment was terminated in January 2013. He sued for wrongful dismissal and damages under the Code. The trial judge awarded damages for wrongful dismissal of 15 months’ pay in lieu of notice, net of Workplace Safety and Insurance Board [WSIB] benefits the appellant received during that period and $10,000 in damages for breach of the Code. The employee appealed, submitting that the trial judge should have awarded him additional damages for wages lost while the employer placed him on a medical leave from August 2010 to January 2013. The employer cross-appealed the trial decision, submitting that the employment contract was frustrated because, at the time of termination, there was no reasonable likelihood that the employee would be able to return to work within a reasonable time. The Court of Appeal dismissed both the appeal and the cross-appeal.

The Court of Appeal ruled that the employer’s decision to put the employee on an unpaid leave of absence in August 2010 was not an infringement of his rights because, at that time, the employer had accommodated the employee to the point of undue hardship. The employer had allowed the employee to work at a reduced pace, to take rest breaks at his discretion, to take breaks to stretch, to take extensive paid time off for medical appointments and to stop performing physically demanding aspects of his job. The employee could not fulfill the basic obligations of his position, despite the accommodations he received. Both the owners of the orthopaedic practice were working an additional 12-13 hours on evenings and weekends to maintain productivity as the employee’s productivity declined to 50 per cent or less of what it should have been. The court agreed with the employer that, in that situation, it made no sense to keep the employee on the payroll and that it was in both the employer’s and the employee’s best interest that the employee be put on leave, allowed to draw WSIB benefits, and given time away from work to recover.

However, the court rejected the employer’s argument that the employment contract had been frustrated. The onus to prove that the contract was frustrated was on the employer. The employer believed that the employee’s limitations were permanent. The WSIB also believed that the employee’s recovery had plateaued and that he was partially permanently impaired as of late 2012. However, the employer did not seek medical information to sufficiently explore and conclude whether there was no reasonable likelihood that the employee could be returned to work with accommodations in the future. Furthermore, approximately a week before the termination, the employer sent the employee a letter informing him that no work was available for him at the time, but that his desire to return to work would be reevaluated if and when he was medically cleared. However, the employer terminated the employment relationship before the employee had a chance to produce medical evidence to demonstrate a reasonable likelihood that he would be able to return to work within a reasonable time.

Implications for employers

Accommodating an employee to the point of undue hardship takes time. Employers should not attempt to rush the process and should take care to explore necessary options for modifying an employee’s duties to conform to his or her medical limitations, making certain to request necessary medical information throughout the process. However, where an employee cannot fulfill the basic obligations of his or her job position despite accommodations, the employer is not required to continue accommodation efforts such that the employer experiences undue hardship, and may require an employee to take an unpaid medical leave while recovering.

The Court of Appeal’s decision in this case also reiterates that employers should be aware that a finding that an employment contract was frustrated due to disability will depend on the facts of each case, including the existence of clear medical evidence regarding the reasonable likelihood that the employee would be able to return to work within a reasonable time. Prematurely alleging frustration of contract without this medical evidence, even after the employer has accommodated the employee to the point of undue hardship, can expose employers to a wrongful dismissal claim, as well as a claim for damages for breach of the Code.

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