Frustration Of Employment Contracts - A Frustrating Topic

Most employers consider that it is safe to conclude that an employment contract is terminated if an employee leaves work due to a terminal illness.

The Ontario Supreme Court of Justice has illustrated why this may be an incorrect conclusion (in a recent case called Dragone v. Riva Plumbing).  Ms. Dragone left work and applied for long-term disability benefits having been diagnosed with terminal breast cancer.  She left because her illness was making it very difficult for her to do her work.  She, in a letter to her employer, indicated that she was hopeful that she would recover enough to return to work.

A retirement party was held for her.  Shortly after that the employer terminated her entitlement to health benefits under the company group insurance program believing that Ms. Dragone had left for good. 

The court concluded that in order for the employer to have rightfully declared the employment contract to be frustrated there would have to be proof that there was no prospect of the employee returning to work.  The fact that the employee chose to leave work and the fact that the disease was thought to be terminal is is not enough to conclude that there is no prospect for the employee to return to work.  This is particularly the case when the employee has expressed a hope to be able to return.

The court also considered that the presence of a disability insurance plan and sick leave policy providing for long-term benefits is an indication that the parties contemplated that frustration would likely require a longer term absence than existed in this case. 

For more information on this topic contact Pushor Mitchell Partner Alfred Kempf at:
kempf@pushormitchell.com or (250) 869-1215