Nov 19, 2018

Frustration of employment contract not just cause for dismissal

Ontario trucker denied coverage by new insurer
employment law
In the recent case of Lewis v Whiteline Trucking Ltd., the adjudicator concluded that frustration of an employment contract did not constitute just cause in the context of statutory notice entitlements. [photo]REUTERS/Hyungwon Kang[/photo]

By Stuart Rudner and Anique Dublin

In the recent case of Lewis v Whiteline Trucking Ltd., the adjudicator concluded that frustration of an employment contract did not constitute just cause in the context of statutory notice entitlements.


On Nov. 28, 2014, Dean Lewis was employed by Whiteline Trucking as a transport driver. Pursuant to Whiteline’s policies, he was required to maintain a clean driver abstract and not incur driving infractions. A failure to meet these requirements could result in him being ineligible for coverage under the company’s insurance policy. Without insurance, he would no longer be able to meet the condition of his employment which required him to be “insurable.”


At some point, Whiteline was notified by its then insurer that it would cease to provide coverage at the end of March 2017. As a result, Whiteline obtained new driver insurance. On March 29, 2017, the new insurer informed Whiteline that Lewis did not qualify for coverage as his driving record did not meet its requirements.


Due to the denial of coverage, Whiteline could no longer offer Lewis employment as a driver of its transport trucks. Consequently, on March 30, 2017, it notified Lewis that his employment was being terminated as of April 1, 2017.


Lewis brought an action against Whiteline for wrongful dismissal. He claimed he was entitled to pay in lieu of termination, as well as severance pay.


Whiteline argued that the employment contract between it and Lewis was frustrated because events beyond the parties’ control brought about circumstances where Lewis could no longer perform the duties for which he was hired.  


According to subsection 230 (1) the Canada Labour Code:


“Except where subsection (2) applies, an employer who terminates the employment of an employee who has completed three consecutive months of continuous employment by the employer shall, except where the termination is by way of dismissal for just cause, give the employee either:


(a) notice in writing, at least two weeks before a date specified in the notice, of the employer’s intention to terminate his employment on that date, or

(b) two weeks wages at his regular rate of wages for his regular hours of work, in lieu of the notice.”


Whiteline also argued, that even if the termination was without just cause, Lewis was not entitled to severance pay as he had not completed 12 consecutive months of continuous employment. In 2016, Lewis broke his leg and was off work from Feb. 23, 2016, to July 11, 2016.


The adjudicator held that the common law doctrine of frustration did not apply to s.230 (1) of the code. Where an employee’s conduct is “non-culpable,” as in the case of frustration of an employment contract, it did not constitute just cause for termination.


The adjudicator held that it was not the intention of Parliament to excuse the employer from certain obligations, such as giving notice or pay in lieu of notice, in cases of non-culpable just cause.


The adjudicator found that there was no evidence to suggest that Lewis’ “had done anything wrong, anything for which he deserved to be blamed, or anything resembling the breach of a duty to his employer. He had not engaged in any conduct for which he was culpable, and which constitute just cause for his termination.”


As a result, the adjudicator held that Lewis was entitled to receive his statutory entitlements as set out is s.230 (1) of the code.


With regards to the gap in employment, the adjudicator found that Lewis completed more than 12 consecutive months of employment with Whiteline and was, therefore, entitled to severance pay as provided for in subsection 235 (1) of the code.


The adjudicator held that the gap in employment was not significant when compared to Lewis’ total period of employment; he was unable to work for reasons beyond his control (that is, it was not a voluntary departure); and he was easily reintegrated into the workplace without causing any difficulty to Whiteline.

Anique Dublin is a law clerk and office administrator at Rudner Law in Toronto.  


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