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Frustration of Contract

  • How long do you have to keep an employee on medical leave?
  • If someone is medically unable to do their job, are they entitled to severance?

The fundamental basis of an employment contract is that the individual will work, and the employer will pay them for their labour. If the individual is unable to work, through no fault of either party, then the contract may be frustrated. In that case, the employer is not terminating the employee’s employment, and the employee is not resigning. Rather, the contract simply comes to an end.

So when can an employer deem the employment contract to have been frustrated by the employee’s inability to work? 

There are no hard and fast rules for determining when a contract of employment has been frustrated, and there are many cases in which employees have been off work for years and the courts have said that the contract had not yet been frustrated. Rather, each case will be decided based upon its own particular facts and, in particular, the medical information available. The courts will assess whether there is any reasonable likelihood that the individual will be able to return to work in the foreseeable future. If there is, then it is unlikely that the court will conclude that the contract of employment had been frustrated.

Employers are often scared to ask for medical information, fearing that they will be in breach of the employee’s privacy rights. We will work with you to navigate this minefield, and explain your right to obtain appropriate medical information so you can assess the situation properly. You do not have to accept the employee’s word, nor do you have to tolerate an employee who goes on leave and then disappears; employees on leave must maintain regular contact with their employer.

It is important for employers to understand that eligibility for disability benefits and entitlement to medical leave are two very different concepts. It is entirely possible that an employee will not be entitled to disability benefits, but will still be disabled in the sense that they cannot return to work. Employers have a duty to accommodate the disabled worker to the point of undue hardship. This can include allowing them to remain on medical leave.

Do not rely on assumptions, as getting this wrong can create significant liability.

How we can help

We routinely work with employers that have employees on medical leave, whether it is a brief absence or an extended period. We will help you to enforce your rights without breaching those of the employee and exposing the organization to liability. Among other things, we can help you ensure that the employee provides sufficient information to allow you to assess their ongoing need for accommodation.

We want to be your Trusted Advisor, your Chief HR Law Officer, your business partner. Let us be part of your team, so that we can look after your employment law issues, and you can focus on your business.

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If you think you may need an Employment Lawyer, then you probably do.

fired for cause book

You’re Fired! Just Cause for Dismissal in Canada

This well-written and comprehensive textbook, authored by Stuart Rudner, provides legal advice to employers, employees, and their legal counsel, as to whether summary dismissal is appropriate in a particular circumstance.

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Rudner Law
15 Allstate Parkway
Suite 600
Markham, ON
L3R 5B4

Phone: 416-864-8500
Text: 416-864-8500

Email: info@rudnerlaw.ca

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