How long is an employer required to keep an employee on the books if they’re unlikely to ever return from a leave of absence?
Question: If an employee has been off work for a while and provides medical information that is uncertain on whether the employee will be able to return, how long must an employer wait before terminating the employee?
Answer: You would be amazed how often this issue arises. We seem to have a lot of employers with employees who have been “on leave” for years. In many cases, there has been no communication for an extended period and the documentation to support the ongoing absence is poor.
Unfortunately, many employers are scared to ask for proper documentation due to a misguided fear that they will be breaching the employee’s privacy rights.
The reality is that a leave of absence is a form of accommodation. Any assessment of accommodation requirements should involve an ongoing dialogue between employer and employee. The starting point is that the employee must produce documentation clearly setting out any limitations on their ability to carry out their duties — whether the accommodation relates to disability, childcare obligations or anything else.
Once that information is provided, the employer has a duty to assess the need for accommodation and, if there is one, assess the potential accommodations. The employee is not necessarily entitled to their preferred choice of accommodation; the duty is to provide reasonable accommodation to the point of undue hardship.
With respect to employees where the medical documentation shows that they cannot return to work, even on modified duties, the question becomes whether or not the contract of employment has been frustrated. Contrary to popular belief, there is no magic number or specific amount of time after which the contract will automatically be deemed to be at an end. Even if the employee is no longer eligible for disability benefits, that does not mean their employment can be terminated if they don’t return to work.
The concept of frustration of contract not only applies to employment contracts; its genesis relates to contracts generally. Simply put, a contract is frustrated when the contract cannot be completed through no fault of either party.
In the context of employment, the fundamental basis of an employment contract is that the individual will work and the employer will pay them for the labour. If the individual is unable to work, through no fault of their own, then the contract may be frustrated. In that case, the employer is not terminating the employee’s employment and the employee is not resigning. Rather, the contract simply comes to an end.
Historically, that would mean that the individual is not entitled to any compensation arising out of the end of their employment. However, employment standards legislation has been amended to provide for termination pay and severance pay in the event of frustration of the employment contract. However, no common law notice, or pay in lieu thereof, will be required.
Each case will be decided based upon its own particular facts and, in particular, the medical information available.
The courts will assess whether there is any reasonable likelihood that the individual will be able to return to work in the foreseeable future. If there is, then it is unlikely that the court will conclude that the contract of employment had been frustrated.
This was an issue faced by Costco a few years ago. An employee, Frank Naccarato, had been off work for about five years. Costco terminated Naccarato’s employment based primarily on his family doctor’s report, which indicated that it would not be possible to state when Naccarato could return to work.
Naccarato sued for wrongful dismissal. Costco lost, primarily because there was no medical evidence to support a conclusion that there was no reasonable likelihood Naccarato could return to work in the reasonably foreseeable future.
Furthermore, in light of the large-scale operation of Costco, there was no basis upon which to conclude that his ongoing absence hurt the company in any meaningful way. As a result, continuing to accommodate him by allowing him to remain on leave did not constitute undue hardship.
Stuart Rudner is the founder of Rudner Law, an employment law firm in Markham, Ont. He can be reached at [email protected] or (416) 864-8500.
