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Dismissing an employee on long-term disability

January 8, 2003
by Israel Foulon LLP

Question: We have an employee who has been off on long-term disability for about two years due to mental illness. He has clearly been off for a considerable period of time and there are no signs he will be ready to return to work in the near future. Can we terminate his employment on the basis he is no longer able to fulfil the terms of employment?

Answer: Basically what you would be arguing is that due to the disability of the employee the contract of employment has been frustrated and therefore you can terminate employment without notice. In order for a disability or illness to constitute frustration of the employment contract, the illness or disability in question must be a permanent one. This means the employee’s incapacity is such that he would be incapable of performing the core functions of his job in the foreseeable future.

Whether or not this is the case will depend on the following factors:

  • the terms of the contract, including the provisions as to sickness pay;
  • how long the employment was likely to last in the absence of sickness;
  • the nature of the employment;
  • the nature of the illness or injury, how long it has already continued and the prospects of recovery; and
  • the period of past employment.

These factors are not necessarily exhaustive of those which the court will take into account. In some cases, courts have held periods of absence of two years or more did not result in a frustration of the contract such that the employer was entitled to treat the employment as at an end.

Whether you can terminate this individual’s employment on the basis of frustration of contract will depend on the application of the above factors to the particular circumstances of your case.

Finally an employer must also be prepared to deal with a potential allegation of discrimination on the basis of disability whenever an employer chooses to terminate an employee on sick leave.

Peter Israel is the senior partner in the Toronto law firm of Israel Foulon LLP – Employment and Labour Lawyers. He can be reached at 416-640-1550 or pi@qtw38575.mywhc.ca. A version of this article originally appeared in the Carswell publication, Canadian Employment Law Today


Legal Disclaimer

This article is for informational purposes only and is not intended to provide legal advice, which in all circumstances must be tailored to the specific facts of any problem. You should obtain a proper legal consultation in order to determine how this article applies to your specific situation. Please feel free to contact Israel Foulon LLP to learn more at 416-640-1550.