Case Law Update: COVID-19 Vaccination Policies and Frustration of Contract

Although in many ways the height of the COVID-19 pandemic seems far in the past, employers and employees (and employment counsel) are still dealing with its impacts today as cases continue to make their way through the court process.

In the recent decision of Croke v VuPoint System Ltd, the Ontario Court of Appeal upheld the 2023 decision of the Superior Court of Justice which found that the employment relationship had become frustrated as a result of an employee’s refusal to comply with the employer’s mandatory vaccination policy. In upholding the decision, the Ontario Court of Appeal confirmed that the employer had no obligation to provide the employee with notice or pay in lieu of notice arising from the cessation of the employment relationship. 

Just the Facts

It is important to understand that the decision in this case does not indicate that the courts would reach the same conclusion on different facts. A determination as to whether the employment relationship has been frustrated or not will always be a fact specific analysis.

In this case, the employee was employed as a technician providing home installation services exclusively to customers of Bell Canada, a client of the employer. In 2021, Bell had adopted a mandatory vaccination policy which installers were required to comply with in order to continue providing services to its customers. The employer adopted its own vaccination policy, which the employee refused to comply with. As a result, he was ineligible to continue providing technician services to Bell’s customers and, since he indicated he had no intention to get vaccinated, his inability to perform his duties was going to continue for the foreseeable future.

Establishing Frustration

The Court of Appeal confirmed that in order for frustration to be established, there must be a supervening event that:

1. radically altered the contractual obligations,
2. was not foreseeable and for which the contract does not contemplate, and
3. was not caused by the parties.

In this case, the court concluded that:

1. the supervening event was Bell’s introduction of its vaccination policy which rendered unvaccinated employees ineligible to provide technician services to its clients;
2. this event was prompted by the COVID-19 pandemic, was an unforeseen circumstance that could not have been anticipated by the parties at the time the contract was entered into;
3. the new vaccination requirement was outside of the employer’s control; and
4. the employer had no obligation to take other non-disciplinary measures before resorting to termination.

Key Takeaways

This case confirms that frustration may be established in circumstances where a third party imposes a vaccination requirement on an employer which an employee refuses to comply with. However, it is important to note that in this case, such a vaccination requirement made it impossible for the employee to provide the services the employer had hired him for. Furthermore, emphasis was placed on the fact that the vaccination requirement was outside of the employer’s control, and not something they had implemented of their own volition.

As noted above, whether or not frustration has been established will depend on the facts of each individual case. We encourage employers and employees to reach out for guidance before taking any actions that could impact their rights.