Personal Injury Law Articles by Gillis Injury Law

There are times where a disabled employee is dismissed and the termination seems wrongful even if he or she was off from work at the time, receiving short-term or long-term disability benefits. An assessment of whether the termination is the result of wrongful dismissal or frustration of the employment contract depends on the facts of the case. In many court rulings and Human Rights Tribunal decisions the termination of a disabled employee has been found to have been a wrongful dismissal resulting in awards to the employee, rather than an alleged frustration of contract, which would release the employer from further monetary obligations to the employee.

Frustration of the Employment Contract

The doctrine of the “frustration of contract” is said to occur when a situation has arisen for which the parties made no provision in the contract and the performance of the contract becomes “a thing radically different from that which was undertaken by the contract.” When an employee is unable to work because of a disabling illness or permanent disability the continuation of the employment contract may be proven to be impossible. No fault is assigned to the employee or employer. There is no penalty to either party if the termination results from proven frustration of the contract.


When a Terminated Employee was Receiving Short Term Disability (STD) Benefits

Employers who have claimed “frustration of an employment contract” due to a disabled employee collecting STD benefits have been unsuccessful to date. The courts and adjudicators do not view an employee who is receiving STD benefits as permanently disabled. Numerous claims may qualify you as a long term disability recipient, however and an employment contract may cease once you have qualified as a long term disability claimant.


Commonly, to be eligible for STD benefits, an employee must be unable to work due to a medical reason that is confirmed by a physician (usually of the insurer’s choice). Coverage is often 50-100 percent of income up to a period of less than one year.


When a Terminated Employee was Receiving Long Term Disability (LTD) Benefits

For an employer to legally terminate a long-term disabled employee the contract must be proven to have been “frustrated.” An employer must prove that the employee will never return to the job he or she was contracted for or there is undue hardship to the employer to wait for the return of that employee. An employee simply collecting LTD benefits is not considered employer hardship by the courts.


Typically, to be eligible for LTD benefits, the employee must have a medical condition that is verified by an initial and periodic medical assessment arranged by the insurer. This medical condition must make it impossible for the employee to perform his or her “own” job for a period (usually the first two years). To continue to receive LTD benefits after 2 years, usually the employee must be unable to perform “any” job.


A Sample “Frustration of Employment” Case

A fast food employee seeking accommodations from her employer in Gahagan v. James Campbell Inc. sets a precedent for an employment contract under frustration. In this case, the applicant was a disabled employee, Ms. Gahagan, who alleged that she was discriminated against when her employer (McDonald’s restaurant) failed to accommodate her physical restrictions resulting from a workplace injury and then terminated her employment after being off for two years off on LTD benefits as a form of reprisal. Because of low back pain from twisting her back, the accommodations she requested were to not to twist or bend, lift more than 10 lbs, stand for more than 10 minutes, sit for more than 5 minutes or work more than 3 hours/day, 3 day/week with a rest day in between. These requests could not be accommodated without risk to co-workers according to the employer. The Human Rights Adjudicator found in favor of the employer’s position that employee termination arose from the nature of the disability and frustrated contract due to the fact employer could not offer a safety compliant accommodation and the employee had failed to return to work.


Legal Options to Terminate an Employment Contract

Termination of a disabled employee can evolve into a costly proposition for any business. Keeping the lines of communication open between management and a disabled employee is always a good a place to start.


A proactive option to address employee termination is a custom employment contract. The employment agreement should be signed by both parties, state clearly and in plain language what the termination procedure will be. A signed contract, drafted within the applicable employment and common laws, can be relied upon in court should an employee make a claim for wrongful dismissal.


If frustration of the contract is the result of an illness or injury suffered by the employee, a terminated employee is still entitled to termination notice or pay in lieu, along with regular termination measures, such as payment of vacation pay and, if applicable, severance pay. Employers must be compliant under the Employment Standards Act, 2000 to give proper notice and severance when terminating employees regardless of reason or circumstances.


Contact Us at Gillis Injury Law

If you are disabled and feel that you have been wrongfully terminated from your employment, a long-term disability lawyer at Gillis Injury Law can help you. We can review your employment contract and the facts of the case in order to advise you about your legal options. Contact us at Gillis Injury Law, in Brampton at 905-709-7447 ext 223 or Richmond Hill at 905-709-7447. Our injury lawyers are available to help you.

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