Many employers struggle to manage disability leave. This is particularly difficult when an employee wants to work but their doctor says that they cannot do so for the foreseeable future. Katz v Clarke provides guidance to employers dealing with this situation. It confirms that an employee's desire to work does not prevent their employer from ending the employment relationship because the employee is unable to work for the foreseeable future.


The employee in the case at hand went on leave in 2008 and was approved for long-term disability benefits. In 2013 a doctor confirmed that there was no reasonable expectation that the employee would be able to perform his essential duties in the foreseeable future.

The employer told the employee that his employment would be terminated because his contract was frustrated – or impossible to perform – due to his continued illness. The employee wrote to the employer to express his desire to get well and return to work. However, when the employer asked for updated medical information to show any change in the employee's outlook, the employee did not respond.

The employer terminated the employee and paid out his entitlements to pay in lieu of notice and severance pay under the Employment Standards Act 2000. The employee sued. He claimed that his employment had been terminated because of his disability, which violated the Ontario Human Rights Code. He also claimed damages for wrongful dismissal and bad faith in the way that his employment had been terminated.

The employer asked the court to dismiss the lawsuit without a trial. The court refused, and the employer appealed.


The appeal court confirmed that employment may be frustrated where there is information that an employee's disabling condition is permanent. If the contract is frustrated, the parties are generally released from their obligations, including the duty to provide reasonable notice of termination or pay in lieu except as required by employment standards legislation.

It was clear in this case that the employee could not return to work in any occupation for the foreseeable future. As a result, the court said that his employment was frustrated. The court also said that the employer's duty to accommodate the employee's disability had ended when he could no longer perform his essential duties for the foreseeable future. The court dismissed the employee's lawsuit.

Takeaway for employers

Employers should be proactive in managing disability leave by, among other things, staying up to date on their employees' potential to return to work. This will allow employers to fulfil their duty to accommodate by assisting with an attempted return to work where possible. It will also allow employers to consider terminating employees who cannot perform their essential duties or return to work and remain on extended leave. Depending on the circumstances, this may be the preferred approach, rather than continuing the facade of an employment relationship where there is no chance that the employee will work for the employer again.

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