Terminating employment due to frustration of contract-by the employee?


#1

I know that an employer after a period of time can use frustration of contract as a reason to terminate employment.

Can an employee who has no reasonable chance of recovery after a period of time terminate his or her employment due to frustration of contract? That would end common law notice liability but still keep intact statutory pay.??

If you have been off on LTD for years and no contact with employer, but the employer is not going to terminate due to statutory pay obligations–could an employee not take the first move?

Anyone’s thoughts?


#2

Is that severance?
If you quit you don’t get severance and you would be quitting the job.


#3

Where an employment contract is frustrated, the employee is not owed common law notice or pay in lieu of notice.

However, if frustration is the result of an injury or illness, the employer does owe the employee their minimum termination and severance entitlements as per the Canada Labour Code or under Provincial Employment Codes…depending on which governs.

So if an employer knows an employee has no chance of returning to employment but does not terminate the employment…can an employee end the employment contract due to frustration. That is not quitting, but stating the obvious. Then could it not be argued that the notice pay is owed?


#4

Interesting.
Maybe the longer a person worked (higher severance) the less chance an employer would want to fire the person.
I would get a low severance and the extended health insurance is useful to me so I wouldh’t initiate it.
I understand why a severance would be useful to some people (plus the company might not be around later to pay severance).
I would like to hear what @David_Brannen thinks. :slight_smile:


#5

What’s good for the goose is good for the gander…is that how the saying goes? The employer and employee have reciprocal duties to give each other notice of termination or resignation. Assuming no collective agreement involved, then the notice period (for resignation by employee or termination by employer) is governed by both common law and provincial employment standards acts. So, just as employers cannot rely on the bare minimum notice periods in employment standards acts, neither can the employee. Believe it or not employers can sue an employee for not giving enough notice of resignation, and the court have ordered employees to to pay damages to the employer for lack of reasonable notice of resignation! This is very rare as employers almost never bother to do this, but legally they could.

So in regards to this question, your could give notice of resignation, but you wouldn’t trigger any right to be paid statutory severance pay, that can only happen if your employment is being terminated by the employer.


David Brannen

Disability Lawyer with Resolute Legal

The response posted above is based on the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with a lawyer, fully explain your situation, and allow the lawyer enough time to research the applicable law and facts required to give an adequate opinion. The basic information provided above is intended as a public service only, a full one-on-one discussion with a lawyer should be done before taking any any action. The information posted on this forum is available to the viewing public and is not intended to create a lawyer client relationship with any person. If you want one-on-one advice, please click here to request a free consultation or call toll free 1-877-282-5188 to speak with a member with our disability claim support team.


#6

I was on LTD for 2.5 years when insurance co. cut me off. Employer put me on unpaid LOA. A year later while still in litigation with the Insurer my Employer terminated my employment under “frustration of contract”. My years of service was 36 years. I did not receive notice or severance. I don’t understand how they can terminate under that cause when I’m on an unpaid leave. They even stated the termination was because I was medically unable to return. I’m in Alberta but I’m not sure if I can do anything about it…

I definitely wouldn’t think an employee can resign under frustration of contract or if you did it would be considered a resignation which means you terminated the contract and so there’s no severance.


#7

The laws are slightly different from province to province, but generally speaking are pretty much the same. See this article where I discuss the issue of frustration of contract and when there is a right to severance.

This article speaks to non-union situations.


David Brannen

Disability Lawyer with Resolute Legal

The response posted above is based on the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with a lawyer, fully explain your situation, and allow the lawyer enough time to research the applicable law and facts required to give an adequate opinion. The basic information provided above is intended as a public service only, a full one-on-one discussion with a lawyer should be done before taking any any action. The information posted on this forum is available to the viewing public and is not intended to create a lawyer client relationship with any person. If you want one-on-one advice, please click here to request a free consultation or call toll free 1-877-282-5188 to speak with a member with our disability claim support team.