Recent Case Examines When an Employee’s Disability Frustrates an Employment Contract

Can you be fired while on disability in Ontario? We explored that question in an article earlier this year. As we explained then, the answer to that question is that it depends—mostly on the reason you were fired. Because Ontario’s Human Rights Code (HRC) requires employers to accommodate workers’ disabilities to the point of undue hardship, if an employer fires an employee because he or she is disabled, it may have violated the law.

Aside from our discussion of the HRC, we also briefly alluded to the concept of frustration of contract. Even when an employer cannot accommodate an employee’s disability without undue hardship, it can still be liable for wrongful dismissal if the disability did not rise to the level of frustration of contract.

But what standard do Ontario courts use to determine whether an employment contract has been frustrated by an employee’s disability-related absence? A recent Ontario Superior Court decision provides the answer.

• A worker’s absence as the result of a disability can amount to a frustration of contract if there is no reasonable likelihood that the worker would be able to return to work within a reasonable period of time.
• Courts consider the totality of evidence available to determine whether a worker’s absence has frustrated his or her contract of employment.
• Disabled Ontario workers should consult an experienced lawyer for help navigating the complex rules relating to disability benefits and frustration of contract.

Roskaft v. RONA: Disabled Employee’s Absence a Frustration of Contract

In September 2002, the plaintiff in this case (Roskaft) began working for the defendant (RONA). Ten years later, Roskaft began a leave of absence for a medical condition. He remained unable to work thereafter and received short-term disability and long-term disability benefits under a disability insurance policy provided by his employer.

In October 2014, more than two years after he had stopped working, Roskaft completed a Return to Work form, stating that he was still unable to work because of his condition. In a section where Roskaft could list a return-to-work date, he instead wrote “N/A.”

In December 2014, the disability insurer informed RONA that Roskaft could not return to work and that he was totally disabled as to both his own occupation and any occupation (the usual standards for short-term and long-term disability benefits, respectively).

Finally, in September 2015, based on the 2014 correspondence RONA received from the disability insurer, the company notified Roskaft that he was being fired as a result of frustration of contract.

In response, Roskaft sued for wrongful dismissal.

Roskaft: RONA’s Failure to Inquire Regarding His Condition Meant It Could Not Fire Him

In his lawsuit, Roskaft pointed out that, “at the time of [the] termination of employment, RONA had not properly considered the possibility of his return to work.” As a result, he argued, RONA could not have known whether he would be returning to work within a reasonable timeframe.

RONA disagreed. It argued, instead, that what evidence it did have suggested that Roskaft was permanently totally disabled and would not be returning to work, and it had no obligation to contact Roskaft to further investigate that conclusion.

To be clear, Roskaft’s argument was not based around a claim that RONA had failed to accommodate him as required by the HRC. In fact, although he originally asserted such a claim when he sued RONA, he dropped that part of his lawsuit before the Superior Court could hear it.

Ontario Superior Court: Roskaft’s Contract Frustrated Because No Reasonable Likelihood of Return to Work

The Superior Court did not completely accept either party’s arguments, but ultimately sided with RONA.

First, the court explained the standard for frustration of contract. The issue it had to decide was “whether at the time of [Roskaft’s] termination of employment there was no reasonable likelihood that he would be able to return to work within a reasonable period of time.”

When it examined the evidence that RONA claimed justified the termination, it found it lacking. Contrary to RONA’s claims about what the insurance company had told it, the December 2014 correspondence from the insurance company did not say that Roskaft was “permanently” disabled, and so RONA could not rely on that alone to fire him.

However, when the court considered the “totality of the evidence,” it found that RONA’s decision was nonetheless supported. Specifically, the court referred to the following:

• The insurance company’s determination that Roskaft qualified for long term disability benefits (meaning he was incapable of engaging in any occupation);
• Roskaft’s ongoing representations that his medical condition had not improved and that he was totally disabled; and
• Roskaft’s continued receipt of long-term disability benefits (suggesting that he agreed with the insurance company’s determination).

Based on that evidence, the court concluded, “it was reasonable for RONA to conclude at the time of termination of employment that there was no likelihood of Mr. Roskaft returning to work within a reasonable period of time.” As a result, Roskaft’s termination was not wrongful, and his lawsuit was dismissed.

Working with a Lawyer on Your Disability Claim

Roskaft’s situation wasn’t all bad. As RONA explained when it fired him, “he would continue to receive [long-term disability] benefits provided he remained totally disabled.” For many Ontarians, just receiving those benefits can entail a lengthy fight with the insurance company, which will try to increase its profits by minimizing payouts.

And notice how nuanced the court’s decision was. Although RONA had based its decision to fire Roskaft on a misreading of the insurance company’s communications, the fact that other evidence existed on which it could have legitimately based that decision was sufficient to support it.

Both of these facts serve to emphasize the need for disabled Ontarians to work with an experienced Ontario disability lawyer to protect their interests. A lawyer will help hold opportunistic insurance companies to their obligations and help the disabled worker evaluate and understand his or her right to continued employment.

Preszler Injury Lawyers is an Ontario disability law firm with consultation offices throughout the province, including in Toronto, Barrie, Hamilton Kitchener, and Scarborough. Our lawyers have decades of experience helping disabled Ontarians protect their rights in and out of court. If you’ve become disabled and need help dealing with your disability insurer, contact us today for a free consultation.

Source: CanLII