When the employment relationship becomes impossible to perform because of a factor outside of the control of the employer or the employee, the employee’s employment can be terminated by virtue of frustration of contact. When an employee will not be able to return to work because of injury or illness, the same applies. But not so for federally regulated employers such as the banks, airlines, inter-provincial trucking companies, etc. According to the recent decision of Kingsway Transport v. Teamsters, Local Union 91 (PDF), the frustration argument is no longer available for those employers when the employee’s inability to return to work is because of a work-related injury or illness.

Facts

Mr. Sears was a 62 year old employee of a federally regulated trucking business who had been off work for 21 years following amputation of his arm resulting from a workplace injury. He maintained his employment status over the years and the employer made benefits and pension plan contributions on his behalf. The employer communicated infrequently with Mr. Sears during the course of his absence and no efforts were made to return him to work after 1994. However, in 2010, the employer requested medical confirmation of Mr. Sears’ functional restrictions and fitness to work. When Mr. Sears responded, confirming that he was unable to work due to the workplace injury, his employment was terminated. He was paid no severance pay or pay in lieu of notice.

Mr. Sears grieved his termination on the basis of section 239.1 of the Canada Labour Code (the “Code”), which contains wording that prohibits dismissal of an employee because of absence for work-related causes, without any time limit to the protection.

Decision

The Arbitrator concluded that section 239.1 of the Code means exactly what it says. It requires federally regulated employers to maintain employment status as well as benefit and pension plan contributions, even for employees, like Mr. Sears, absent for years with no prospect of ever returning to work.

In particular, he found that section 239.1 indicated “a clear intention to protect the employment status and benefits of workers who are injured on the job”, and that those protections are not subject to a time limit. This is in contrast to the similar provision in the Code dealing with non-work-related illness or injury, which limits protection to 12 weeks.

“Simply put”, the Arbitrator said, “the employer cannot dismiss a worker because of absence from work due to work-related illness or injury”. He found further that subsections 239.1(5) and (7) of the Code require continuation of employer benefit and pension contributions during the absence and override any restrictions in the collective agreement, such as the requirement that employees be at work at some time during the month for which contributions are made.

The Arbitrator rejected the employer’s argument that the employment agreement had been frustrated, an argument usually available where an extended absence for illness or injury results in no foreseeable chance of the employee returning to work. The Arbitrator said that the language of the relevant provisions of the Code operate to override the common law doctrine of frustration and extinguish an employer’s right to terminate employment when the employee’s absence is the result of a work-related illness or injury.

Accordingly, the Arbitrator ordered Mr. Sears’ reinstatement to non-active status (unless cleared to return to work by a physician), with corresponding reinstatement of his benefit and pension plan contributions.

Employer Take-Aways

This decision will make it difficult for federal employers to dismiss an employee off work for work-related causes, even when the absence is prolonged and the prospect of the employee ever returning to work is slim.

However, the decision makes it clear that section 239.1 is not an open-ended guarantee of employment status and benefits. Where circumstances change, for example where an employee is given clearance to return to work and attempts are made to accommodate the disability, any continuing absence could not be said to be due to the work-related illness or injury and the requirements of section 239.1 would not be met.

Accordingly, federally regulated employers should be reminded of the importance of maintaining regular communication with employees during extended disability leaves with a view to establishing a return to work plan tailored to the employee’s functional restrictions. Although not subject to the same Code provisions, provincially regulated employers should also maintain regular communication with employees during extended leaves to ensure they follow-up if the employment relationship becomes frustrated.