Many employers struggle to manage disability leaves. It is particularly difficult when the employee wants to work, but his physician says there is no chance the employee can for the foreseeable future. The decision in Katz et al. v. Clarke provides guidance to employers dealing with this situation. It confirms the desire to work does not prevent an employer from ending employment because the employee is not able to work for the foreseeable future.
The employee went off work in 2008 and was approved for long-term disability benefits. In 2013, a doctor confirmed there was no reasonable expectation the employee would be able to perform his essential duties in the foreseeable future.
The employer told the employee he would be terminated because his contract was frustrated -- or impossible to perform -- because of his continued illness. The employee wrote to the employer to express his desire to get well and return to work. But, when the employer asked for updated medical information to show any change in outlook, the employee did not respond.
The employer terminated the employee and paid out his entitlements to pay in lieu of notice and severance pay under the Employment Standards Act, 2000. The employee sued. He claimed he was terminated because of his disability in violation of the Ontario Human Rights Code. He also claimed damages for wrongful dismissal and bad faith in the way he was terminated.
The employer asked the court to dismiss the lawsuit without a trial. The court refused, and the employer appealed.
What did the court decide?
The appeal court confirmed employment may be frustrated where there is information that an employee's disabling condition is permanent. If the contract is frustrated, the parties are generally released from their obligations, including the duty to provide reasonable notice of termination or pay in lieu except as required by employment standards legislation.
It was clear in this case the employee was unable to return to work in any occupation for the foreseeable future. As a result, the court said his employment was frustrated. The court also said the duty to accommodate the employee's disability ended when he was no longer able to do his essential duties for the foreseeable future. The court dismissed the employee's lawsuit.
Takeaway for employers
Employers should be proactive in managing disability leaves by, among other things, keeping updated on the employee's potential for a return to work. This will allow the employer to fulfill its duty to accommodate by assisting with an attempted return to work where possible. It will also allow an employer to consider terminating where the employee is unable to perform essential duties or return to work and remains on an extended leave. This may, depending on the circumstance, be preferable to continuing the façade of an employment relationship where there is no chance the employee will work for the employer again.
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Gillian Round is an associate with Fasken Martineau DuMoulin LLP in Toronto, practicing labour, employment, and human rights law. She can be reached at (416) 865-5469 or firstname.lastname@example.org.