Frustration of Contract

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 their own, 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.

How long does an employer have to be on medical or disability leave before you can terminate their employment? That is a question we are asked all the time, and the answer is that there is no simple answer. What is clear, though, is that this is an issue that is fraught with risk. If you get it wrong, you expose yourself to tremendous risk.

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 off on leave and then disappears; employees on leave must remain 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.

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.

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.