Canadian Employment Law Today

Canadian Employment Law Today | 7 Cases and Trends Canadian HR Reporter, 2019 Hoekstra returned from this second medical leave in September 2012, but this was short-lived. His symptoms became too much too handle and he took another med- ical leave of absence, indicating he expect- ed to return to work on Dec. 3 of that year. However, he had to extend his leave, pro- viding a new return date of March 5, 2013. During the course of the leave, Hoekstra maintained regular contact with Rehabil- ity and made appearances at the company's social events so he could continue feeling a part of the staff. Once again, Hoekstra's medical condi- tions prevented him from being able to work, so he was unable to return on the expected date. His leave stretched for a few more years with no new expected return-to-work date. Prognosis for return not good Hoekstra also received disability benefits through a private insurance policy he had. In January 2016, his family doctor completed a form for the private insurer that stated Hoek- stra's condition had not shown improvement to the point where gradual or full-time work was viable. e doctor also wrote on the form that Hoekstra had "ongoing disability since 2008 unlikely to return now." In January 2017, Rehability informed all of its employees that it would be changing health-care providers effective March 1. e company told Hoekstra — who was still on medical leave — that he wouldn't be eligible for benefits with the new health-care pro- vider. However, Hoekstra's wife was also a Rehability employee and her spousal benefits would cover Hoekstra with the new provider. Around the same time, Hoekstra's doctor completed another assessment form based on an October 2016 assessment with the same prognosis — Hoekstra was unlikely to return to work due to his ongoing disability. Hoekstra told Rehability that he wanted to return to work and intended to do so, ask- ing why he was no longer eligible to receive group benefits as an employee. e company responded that it no longer considered him an employee since his contract of employ- ment had been frustrated and he wouldn't be able to return to work. Hoekstra accepted that his employment with Rehability had ended because of his ongoing medical is- sues, but he requested payment of termina- tion entitlements. Rehability didn't meet Hoekstra's request to his satisfaction, so he sued the company for wrongful dismissal damages — a regula- tion under the Ontario Employment Stan- dards Act, 2000 (ESA) requires employers to pay "the employee's minimum termination pay and severance pay as of the date of frus- tration" in the event of a frustration of em- ployment contract — as well as damages for discrimination based on his disability and punitive and aggravated damages. About one month after Hoekstra filed his suit, Rehability communicated through counsel that the employment contract was frustrated before Hoekstra's allegations, but it was willing to offer him his job back effec- tive immediately. Hoekstra refused the offer of re-employment. The court noted that frustration of the con- tract employment doesn't require an act by either the employer or the employee — "once circumstances exist that have the effect of frustrating the terms of a contract, the con- tract is deemed terminated" — particularly when the frustration is because of the em- ployee's illness, which is beyond the control of either party, said the court, adding that frustration occurs when "there is no reason- able likelihood of the employee being able to return to work within a reasonable time." By the time Rehability told Hoekstra he was no longer an employee, he hadn't worked in three-and-one-half years and his most recent medical assessment showed no prognosis of returning to work. erefore, as of the October 2016 medical assessment by the worker's doctor, there was no reasonable likelihood that Hoekstra would be able to return to work within a reasonable time — frustrating the employment contract at that time, said the court. Entitlement to termination pay follows frustration The court found that, with the frustration, Hoekstra was entitled to termination pay under the ESA and, since Rehability had an annual payroll greater than $2.5 million, sev- erance pay under the ESA as well. Since the company paid Hoekstra's benefits until the health-care provider changed on March 1, 2017, there were no damages for lost benefits. However, the court didn't find any evi- dence that Rehability's conduct was mali- cious or egregious enough to warrant puni- tive or aggravated damages. e company maintained regular contact with Hoekstra and kept a positive relationship the entire time he was on medical leave, up to the change in health-care providers. e com- pany acted as though Hoekstra was a valued employee and even offered him his job back if he was capable of returning, after Hoeks- tra had filed the lawsuit. The court found that the problem stemmed from Rehability's decision to change its dis- ability benefit and health-care provider — a decision that was made for the company as a whole and wasn't intended to harm Hoekstra or terminate his employment. It was Hoeks- tra who saw his ineligibility as an attempt to termiante him, said the court. "ere is no evidence that [Rehability's] offer of employment made after the action was commenced was a sham or not geniune," the court said. "e offer was consistent with [Rehability's] position that it never intended to terminate [Hoekstra's] employment and was also consistent with (Hoekstra's] stated desire to one day return to work." e court noted that Hoekstra continued to receive benefits from Rehability through his wife's spousal coverage, so his financial circumstances weren't significantly affected. In addition, it found that it was likely had the company not changed its benefits provider, Hoekstra would have continued to receive benefits as an employee. Rehability was ordered to pay Hoeks- tra severance and termination pay under the ESA based on his regular salary when he worked with the company. Hoekstra's claim for punitive and aggravated damages was denied. For more information see: • Hoekstra v. Rehability Occupational er- apy Inc., 2019 ONSC 562 (Ont. S.C.J.). Once circumstances exist that frustrate the contract of employment, the contract is deemed terminated. « from FRUSTRATION on page 1 Worker wasn't eligible for benefits under new insurance provider Employment law blog Canadian Employment Law Today invites you to check out its employment law blog, where editor Jeffrey R. Smith discusses recent cases and developments in employment law. The blog features topics such as work refusals, employees who quit and change their mind, and conflict of interest policies. You can view the blog at www.employmentlawtoday.com.

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