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Employment contracts can be frustrating, but they can also be frustrated.  The former is a simple fact of life, while the latter is a key principle of contract law.

“Frustration” occurs where an unanticipated event destroys the heart of the contract to the point where it can no longer be fulfilled. When a contract becomes frustrated, the parties are relieved of any obligation they were contractually bound to perform.  The legal concept, while simple in theory, has been difficult for employers to apply, particularly in the case of absences due to the critical illness or injury of an employee.

In the recent case of The Estate of Christian Drimba v Dick Engineering Inc., 2015 ONSC 2843 (“Drimba”), an Ontario court examined the concept of frustration in the case of the terminal illness of an employee who subsequently passed away.  The case provides guidance to employers about the factors a court or tribunal may look at when making such a determination.
Continue Reading A Frustrating Employment Contract: When Does it End in the Case of Terminal Illness?

Many in the employer community were surprised by three recent cases (here, here and here) in which the Ontario courts struck down termination clauses in employment contracts for the failure to specifically reference the continuation of benefits through the statutory notice period under the Employment Standards Act, 2000 (the “ESA“).  The termination clauses in the employment contracts at issue in these cases appeared, on their face, to be valid and enforceable in light of the prevailing legal principles and existing case law.
Continue Reading Is Freedom of Contract Dead in Canadian Employment Law? Termination Clauses and Benefits Continuation Through the Notice Period