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Frustration of Employment

Sometimes, due to unforeseen circumstances that are not within an employee’s or employer’s control, an employee will find it is impossible to perform the employment contract. Some instances of frustration of employment may occur in situations where an employee’s permanent illness renders them unable to work, regardless of an employer’s attempts at accommodation.

In situations of frustrated contracts, because neither party is “at fault”, an employer is not obligated to provide the employee reasonable notice or payment in lieu of notice, only what is required under statute. Given that employees stand to lose significant amounts in terms of their notice or pay in lieu thereof, courts require the employer to prove the contract was in fact frustrated and will scrutinize the facts of the case.

While an employee may have frustrated their employment contract due to their disability, employers must not forget their obligation to accommodate, given that human rights are another consideration which attracts potential liability.

There is a misconception that employment contracts are frustrated after an employee receives their long-term disability benefits for two (2) years, a duration which commonly appears in long-term disability insurance policies. For some policies, after two (2) years, an insurer’s test for benefit qualification becomes more stringent. This timeframe, however, is not determinative of frustration of the employment contract, and acting based on that assumption can prove to be an expensive mistake.

Whether an employee is able to return to work in the foreseeable future will depend on several factors, including the permanency of the illness, the nature and duration of the illness, the prospect of recovery, medical documentation, and, to an extent, the length and importance of the employee’s position.

While employers want to know whether six (6) months or two (2) years is sufficient to claim frustration of contract, of course the answer is—it very much depends on the facts of the case.

It is also important as an employer to take the proper steps to ensure frustration has occurred, and to not conclude the contract has been frustrated by mere passage of time.

Contact Us

If you are an employer who wants to take the proper steps before, during, and after your employee’s frustration of contract, or an employee who has questions about whether your contract is frustrated or whether you are entitled to more, our team of experienced workplace lawyers at Achkar Law can help. Contact us by phone toll-free at +1 (866) 508-2548 or email us at [email protected] and we would be happy to assist.

If you are a small or medium-sized company looking for full-service support with same day response, visit our CLO Program page for our strategic solutions.