Employment contract frustrated by disability

An employment relationship isn’t always ended by an action of an employer or an employee. Sometimes it’s ended by events as they unfold

An employment relationship isn’t always ended by an action of an employer or an employee. Sometimes it’s ended by events as they unfold.

Violet Velovski worked for Noma for 18 years until she was laid off indefinitely on March 2, 1998. Woods Industries (Canada) Inc. purchased Noma’s assets that May.

On July 30 the company told Velovski it wanted her to return to work. Velovski said she had been in a car accident the previous month and could not work. Shortly thereafter Woods placed her on its benefits plan.

In May 2000 the company again contacted her about returning. In August it sent her a form asking her to have her doctor fill it out in as detailed a manner as possible.

“Once we have this information we will work with the insurance company to have you return to work as soon as possible, with modified hours/duties if required,” an accompanying letter said.

Velovski sent the company a note from her doctor which read: “She is still ill and unable to work in the foreseeable future.” After that there was no contact between her and the company.

Woods closed the manufacturing facility in December 2003 and provided termination and severance pay to employees terminated as a consequence of the closure. Velovski filed an action seeking the same termination and severance pay the other employees received.

Woods argued that, even though Velovski had been provided with certain paid benefits, she never became its employee as defined in the province’s Employment Standards Act as she never performed services for the company or received wages from it. Even if there was an employment relationship between her and the company, that relationship was over by mid-2000 at the latest, the company said.

The Ontario Labour Relations Board agreed. Typically an employment relationship is severed by some action of the employer (for example, saying “you’re fired” or closing its plant) or the employee (for example, by submitting a letter of resignation). In some circumstances, however, the relationship simply becomes frustrated or impossible.

Termination pay is only owed when an employer’s action causes the employment relationship to end. A ¬disabled employee may be entitled to severance pay when an employment contract becomes impossible to ¬perform, but in this case the employer’s action of closing the plant was not what caused the relationship to end.

Velovski’s employment contract had ended by Aug. 16, 2000, at the very latest, the board ruled. At that point she hadn’t worked in the plant for about 28 months and her doctor had told the company she could not return “for the foreseeable future” even with modified duties.

As there was no way of accommodating Velovski’s return to active employment, and no chance there ever would be, the employment contract was frustrated at that point, the board said.

For more information see:

•Velovski v. Woods Industries (Canada) Inc., 2005 CarswellOnt 3570, [2005] O.L.R.B. Rep. 331 (Ont. L.R.B.)

To read the full story, login below.

Not a subscriber?

Start your subscription today!