Limits on an Employer’s Duty to Accommodate: Frustration of an Employment Contract

When an employee is on long-term disability leave, the employment law regime provides that the employer has a duty to accommodate their employees. One such duty compels employers to preserve the employee’s right to return to work. But, how does the law govern cases where an employee’s absence extends beyond 5 years and the employee has no prospects of returning? How long does the law protect their employment? The Ontario Divisional Court’s recent decision in Katz et al. v. Clark [1] provided insight into such questions. The answer: not indefinitely. The law now dictates that an employer can terminate an employee for frustration of contract, because it is “inherently impossible” to accommodate those who cannot return to work.

In this case, Mr. Clarke had been employed by Katz Group (“Katz”) for 13 years as a Front Store Manager. Due first to depression, and then to a leg injury, he had been on a leave of absence since 2008. In early 2013, when Katz learned that Mr. Clarke was unable to perform essential work duties, and there was no reasonable expectation that he would be capable of performing them in the foreseeable future, Katz advised Mr. Clarke that his employment had been frustrated.

In September 2013, Mr. Clarke’s counsel wrote to Katz that Mr. Clarke “has been working very hard to get well so that he can return to his former employment and perform the essential duties of his position.” In response, Katz requested updated medical information outlining Mr. Clarke’s estimated date of return and prognosis for recovery. Mr. Clarke failed to respond or provide the requested particulars. In December 2013, Katz requested these documents once again. In the absence of a response, Katz terminated Mr. Clarke’s employment. Mr. Clarke commenced an action for wrongful dismissal under the Ontario Human Right’s Code. Katz moved to have the claim dismissed summarily, and the judge dismissed the motion.

On appeal to the Divisional Court, the court found in favour of Katz and held that an employer’s duty to accommodate ends when the employee is no longer able to fulfil the basic obligations associated with the employment in the foreseeable future. If there is evidence that the employee’s disabling condition is permanent, the doctrine of frustration of contract applies.

While this case imposes limits on an employer’s duty to accommodate, those relying on this principle should be advised that there still remains a high threshold to demonstrate that a contract has been frustrated. Without proof that an employee will permanently be unable to discharge their duties, the court may well preserve the employee’s right to return to work despite a long absence.

[1] 2019 ONSC 2188