Canadian Employment Law Today

September 11, 2019

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

Issue link:

Contents of this Issue


Page 1 of 7

with Stuart Rudner Ask an Expert RUDNER LAW TORONTO 2 | September 11, 2019 Have a question for our experts? Email Canadian HR Reporter, 2019 Answer: Your question assumes that the ter- mination provisions in the previous agree- ment are effective, which is something that should be confirmed with an employment lawyer. In many cases, employees have em- ployment agreements that are either entirely unenforceable or contain a termination clause that is ineffective. e best way to fix that is to put a proper contract and termina- tion clause in place when there is a promo- tion, salary increase or anything new being offered to the employee. e key is to docu- ment the fact that it is truly a quid pro quo: e employee will only receive the promo- tion, pay increase or other consideration if they accept the terms and conditions in the new agreement. If the existing agreement is otherwise good and the termination clause therein is effective, then my usual approach is to simply docu- ment the change and confirm that, aside from those terms that are changing, such as title or compensation, all of the terms and conditions set out in the previous agreement remain in force. e employee should sign off to con- firm their understanding and agreement. It is also helpful to include clauses in em- ployment agreements that provide that in the event of changes to specific terms in the future, the remaining terms and conditions will remain in force. You can then confirm that at the time of any changes. Stuart Rudner is the founder of Rudner Law, an employment law firm in Markham, Ont. He is the author of You're Fired: Just Cause for Dismissal in Canada, published by om- son Reuters Canada. He can be reached at or (416) 864-8500. Maintaining termination provision with change in employee's position Question: If an employee is given a new employment agreement with a change in position, will it suffice to say the termination provision in the previous agreement continues to apply or should it be repeated in the new agreement? Employee on medical leave with no prospect of returning Question: If an employee has been off work for a while and provides medical information that is uncertain on whether the employee will be able to return, how long must an employer wait before terminating the employee? Answer: You would be amazed how often this issue arises. We seem to have a lot of clients that have employees who have been "on leave" for years. In many cases, there has been no communication for an extended period and the documentation to support the ongoing absence is poor. Unfortunately, many employers are scared to ask for proper documentation due to a misguided fear that they will be breaching the employee's pri- vacy rights. e reality is that a leave of absence is a form of accommodation. Any assessment of accommodation requirements should involve an ongoing dialogue between em- ployer and employee. e starting point is that the employee must produce documen- tation clearly setting out any limitations on her ability to carry out her duties — whether the accommodation relates to disability, childcare obligations or anything else. Once that information is provided, the employer has a duty to assess the need for accommo- dation and, if there is one, assess the poten- tial accommodations. e employee is not necessarily entitled to her preferred choice of accommodation; the duty is to provide reasonable accommodation to the point of undue hardship. With respect to employees where the medical documentation shows that they cannot return to work, even on modified du- ties, the question becomes whether or not the contract of employment has been frus- trated. Contrary to popular belief, there is no "magic number" or specific amount of time after which the contract will automatically be deemed to be at an end. Even if the employee is no longer eligible for disability benefits, that does not mean her employment can be termi- nated if she doesn't return to work. e concept of frustration of contract does not only apply to employment con- tracts; in fact, its genesis relates to contracts generally. Simply put, a contract is frustrated when the contract cannot be completed through no fault of either party. A classic ex- ample is where two parties enter into a prop- erty rental agreement. If there is a fire and the property burns down, it will be impos- sible to complete the contract, but this will not be the fault of either party. In that case, both parties will be relieved of their obliga- tions going forward. In the context of employment, the fun- damental basis of an employment contract is that the individual will work and the em- ployer will pay her for her labour. If the in- dividual is unable to work, through no fault of her own, then the contract may be frus- trated. In that case, the employer is not ter- minating the employee's employment and the employee is not resigning. Rather, the contract simply comes to an end. Histori- cally, that would mean that the individual is not entitled to any compensation arising out of the end of her employment. However, em- ployment standards legislation, including Ontario's Employment Standards Act, 2000, have been amended to provide for Termi- nation Pay and Severance Pay in the event of frustration of the employment contract. However, no common law notice, or pay in lieu thereof, will be required. e 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 em- ployment had been frustrated. is was an issue faced by Costco a few years ago. An employee, Frank Naccarato, had been off work for approximately five years. Costco terminated Naccarato's em- ployment based primarily on his family doc- tor's report, which indicated that it would not be possible to state when Naccarato could return to work. Naccarato sued for wrongful dismissal. Costco lost, primarily because there was no medical evidence to support a conclusion that there was no rea- sonable likelihood Naccarato could return to work in the reasonably foreseeable future. Furthermore, in light of the large-scale op- eration of Costco, there was no basis upon which to conclude that his ongoing absence hurt the company in any meaningful way. As a result, continuing to accommodate him by allowing him to remain on leave did not con- stitute undue hardship. Each case will be decided based upon its own particular facts and, in particular, the medical information available. Unless it is clear that there is no reasonable likelihood of a return to work in the foreseeable future, it is unlikely a court will find that the contract of employment was frustrated. For more information see: • Naccarato v. Costco, 2010 ONSC 2651 (Ont. S.C.J.). A contract is frustrated when the contract cannot be completed through no fault of either party.

Articles in this issue

Links on this page

Archives of this issue

view archives of Canadian Employment Law Today - September 11, 2019