I am often asked by HR Managers and other supervisory personnel how long an employee can be off work due to illness before he is deemed to have abandoned his position. Many HR people question whether they have to retain the opening indefinitely where there is no reliable prediction as to when an employee will return to work. The issue is important in that the inability of an employee to return to work will result in frustration of the employment contract, thereby absolving the employer of any responsibility for further salary other than termination pay under the Employment Standards Act. In making such a determination, the obligation of an employer to accommodate an employee’s disability must also be considered.

Under the Human Rights Code, an employer is required to take whatever steps it can to accommodate a disability of an employee, so long as such steps do not cause “undue hardship” to the employer. In considering what is undue hardship and how far the employer’s duty to accommodate illness will go, the Supreme Court of Canada has held that “the employer’s duty to accommodate ends where the employee is no longer able to fulfill the basic obligations associated with the employment relationship for the foreseeable future”. In that case, the medical opinion presented to the trial court indicated that the plaintiff would not be able to return to work.

The case law is also clear that where an employer relies on an inability of the employee to work as grounds for frustration of the contract, the onus is on the employer to establish that frustration. For example, in one decision, the Ontario Superior Court refused to find that the contract had been frustrated even though the plaintiff had been absent from work for approximately 14 months. In that case, the trial judge had held that the evidence demonstrated that there was a hope that the plaintiff would be able to return to work eventually.

It has also been held by the Ontario court that, in determining whether or not disability will constitute frustration, the court must consider the entirety of the relationship. The court must look at whether or not the illness or incapacity is of such a nature that it is likely to continue for a period of time, or that it would be unreasonable for the employer to wait any longer for the employee to return to work. The position held by the absent employee will also be a relevant consideration. For example, in one Ontario case the judge felt that, “when the absent employee is a senior executive whose absence cannot be long tolerated if the business is to succeed then a relative short period of incapacity may frustrate the contract”.

The most recent decision on this issue was released on June 15, 2010, by the Ontario Superior Court. The case dealt with a claim brought against Costco Wholesale by a former employee dismissed as a result of an alleged inability to return to work. In this case, the employee had been off work for almost four years, and there was no stated prospect of his imminent return. In its decision, the court rejected the employer’s position that the absence resulted in frustration of the contract. First of all, the court found that the onus was on Costco to prove that the employee “can no longer fulfill the basic obligation of his job for the foreseeable future”. Costco failed to bring any medical evidence to support such a finding. It is interesting to note that the judge considered the fact that Costco had provided a long-term and short-term disability program, which he felt was evidence of the fact that a long-term disability and possible return to work were in the contemplation of the parties when the employment commenced.

The court therefore held that the employee had been wrongfully dismissed and awarded the employee 10 months pay in lieu of notice.

It should be pointed out that this result could have been avoided if Costco had had a clearly written disability policy dealing with long-term disability of its employees.

Earl Altman
Garfinkle, Biderman