If you are off work due to a disability, the law affords you job protection, up to a point. However, that job protection is typically not permanent. After two or more years on disability leave, if no recovery or return to work is in sight, your Ontario employer may be able to formally dismiss you for a kind of no-fault reason known as “frustration of employment”.
Frustration of Employment – What is it?
Employment relationships become “frustrated” at law when they become impossible to perform. Frustration is a no-fault termination of employment; it means your employer can end your employment without providing you with common law severance (i.e., damages for wrongful dismissal).
“Your employment might become frustrated if you have been disabled from work for a lengthy period with no reasonably foreseeable return to work,” explains Nick Goldhawk, Toronto employment lawyer at Share Lawyers.” In the disability context, frustration of employment typically starts becoming a possibility after about two years of absence due to disability, with no foreseeable return. That said, if your doctor believes that a return is possible, your employment may survive for much longer – in some cases, for as long as a five-year absence.”
You are entitled to payment upon frustration of your employment due to disability
While you are not entitled to any common law severance in this circumstance, you are still entitled to notice and severance pay under the Employment Standards Act (“ESA”), under Ontario law. Those ESA payments are calculated based only on your years of service (including periods of time on disability leave) and can top out at 34 weeks (around 8 months’ pay). This puts Ontario employees at a relative advantage compared to some other provinces, where frustration of employment is grounds for termination without payment of any kind.
You can claim termination pay/severance -- even if you have not been terminated
Because of these entitlements, your employer may drag its feet on terminating your employment for frustration – even if you are clearly permanently disabled. Why pay you notice and severance when they can simply leave you hanging for free?
This is a very common employer strategy. Some employers may go as far as to encourage you to resign to collect your pension or retiree benefits, and to do away with the annoyance of providing regular medical updates
However, you have another option in this situation – to claim that your own employment has been frustrated, giving rise to your notice and severance entitlements under the ESA. Ontario Courts have held that frustration occurs as a matter of law, and that it is not necessary for your employer to terminate you for the appropriate termination entitlements to become payable in this circumstance.
Be aware of offset issues
Employees should be mindful of how termination/severance payments might interact with ongoing long term disability payments. Specifically, many long term disability policies contain terms which say that your monthly LTD payments may be temporarily reduced or eliminated if you receive some other form of income replacement, including termination or severance pay. Therefore, before claiming termination pay/severance due to frustration, consider whether doing so will benefit you overall – or whether you’re simply doing your LTD insurer a favour.
This last point is one of the reasons that Share Lawyers, a Toronto disability law firm, has employment lawyers to assist our clients with their denied claims. Disability law and employment law intersect in ways that are not well understood by those who need legal protection the most.
If you have been dismissed due to frustration of employment, or your termination or severance payment may cause offset issues with your LTD payments, contact Share Lawyers. We have 35 years of experience specializing in disability law and employment law, and we can help. Share is There.
If you have been terminated, laid-off, or severed from your employment contact in Canada, our experienced team of employment law lawyers in Toronto can help. We offer free consultations and there are no fees unless we win your case. Find out if you have an Employment Case.