FRUSTRATION OF EMPLOYMENT CONTRACTS FOR EMPLOYERS

An employment contract can be considered frustrated when an unforeseen event, outside the control of both you and the employee, makes it impossible to fulfill the terms of the contract. The event must make the employment relationship fundamentally different from what was originally agreed upon.

• Employee’s permanent disability: If an employee becomes permanently unable to perform their job duties due to illness or injury.
• Imprisonment of the employee: If the employee is incarcerated for a significant period.
• Changes in legislation: A change in the law that makes it illegal or impossible for the employee to continue working.
• Destruction of the workplace: A fire or natural disaster that permanently shuts down the business.

Your obligations will depend on the province where the employee works.

• In some provinces (like Ontario), even if a contract is frustrated due to illness or injury, you are still required to provide statutory termination payments (and Severance Pay, if applicable) as outlined in the employment standards legislation.
• In other provinces, frustration of contract may relieve you of the obligation to provide notice/pay in lieu of notice or severance pay.

It is crucial to understand the specific requirements in your province and consult with an employment lawyer to ensure compliance.

Yes, an employee can challenge your claim. It’s crucial to have a strong legal basis for claiming frustration and to document the circumstances thoroughly.

If a court finds that the contract was not truly frustrated, you may be liable for wrongful dismissal damages, including pay in lieu of notice and potentially additional damages.

• Consult an employment lawyer: Contact Us!
• Review provincial employment standards: Check the website of your provincial Ministry of Labour for information on employment standards, including termination pay.
• Employment and Social Development Canada (ESDC): The ESDC website provides information on federal labour standards.