Previously, we posted about the Ontario Superior Court of Justice’s (“ONSC”) Croke v Vupoint Systems Ltd. [Croke] decision, which held that an employee’s refusal to comply with the employer’s vaccination policy amounted to a frustration of contract.
Recently, the Ontario Court of Appeal (“ONCA”) revisited Croke and upheld the ONSC decision. The ONCA agreed the employee was not entitled to any damages for wrongful dismissal given the frustration.
Background
As described in our previous blog on Croke, the employee was a systems technician for the employer, who provided services on behalf of Bell Canada (“Bell”). Bell generated more than 99% of the employer’s revenue, and the employee only provided installation services to Bell.
Bell implemented a mandatory vaccination policy (the “Bell Policy”) in response to the COVID-19 pandemic and imposed this requirement on its subcontractors, including the employer. To mirror Bell’s COVID-19 vaccination requirements, the employer implemented its own mandatory vaccination policy (the “Policy”). The Policy stated that non-compliant employees would be “prohibited from performing work for certain customers (including Bell)” and “may not receive the assignment of any jobs.” There was no reference in the Policy with respect to termination of employment.
The employee refused to disclose his vaccination status, stating privacy reasons. In response, the employee was notified his employment would end in two weeks (“Notice of Termination”). At no time did the employee state any intention to become vaccinated. The employer ultimately alleged frustration and paid out the employee’s statutory pay.
The employee proceeded to file an action for wrongful dismissal. The motion judge dismissed the Employee’s action and held that his non-compliance resulted in a frustration of contract. As such, the employee was not entitled to any damages for wrongful dismissal.
The employee subsequently appealed the decision.
ONCA Decision
The ONCA dismissed the employee’s appeal, agreeing with the lower court that his non-compliance amounted to frustration and he was not entitled to wrongful dismissal damages.
Frustration requires that a “supervening event”:
- radically altered the contractual obligations;
- was not foreseeable and for which the contract does not contemplate; and
- has not been caused by the parties.
The employee argued the test must fail at the third criterion because the employee’s voluntary conduct caused the frustration of contract. According to the employee, the termination of his employment should have therefore been considered through the lens of a just-cause dismissal rather than a frustration of contract.
The ONCA disagreed, holding the employee’s voluntary conduct was not the “supervening event”. Instead, the Bell Policy was the supervening event which led to the frustration of the contract. It did not matter whether an employee chose not to be or simply could not be vaccinated—absent vaccination, employees could not work on Bell’s projects, which made up almost all the employer’s work.
The employee had also argued that the frustration test must fail the second criterion because the Bell Policy constituted a “business exigency”, which is typically considered foreseeable. The ONCA rejected this argument, holding there was nothing foreseeable about an unprecedented global pandemic that would cause Bell to implement the Bell Policy. Therefore, the parties could not have contemplated a response to a pandemic when the employment agreement was signed in 2014.
The ONCA also disagreed with the employee that the employer could have engaged in progressive discipline, such as a suspension, rather than terminating his employment. The ONCA reiterated the supervening event was the Bell Policy, not the employer’s decision to terminate the employee’s employment. The employer had no control over the Bell Policy, and as the employee never signalled an intention to become vaccinated, the only basis for the employment termination was the frustration of contract.
Lastly, the ONCA rejected the employee’s argument that he did not receive adequate warning that his non-compliance with the Policy would result in the termination of his employment. As the employee received the Notice of Termination, was aware of the Policy, and understood Bell’s requirement for him to be vaccinated, he would have known his employment could end as a result of his non-compliance with the Policy. The ONCA noted that while notice is not necessarily required in cases of frustration, depending on the circumstances, an employer who does not provide an employee the opportunity to rectify their non-eligibility to work prior to terminating the employee’s employment may be unable to establish frustration.
Takeaways
The ONCA Croke decision confirms there may be circumstances where an employee’s refusal to comply with a mandatory workplace vaccination policy could amount to frustration. Employers should note, however, that the circumstances in Croke are unique and therefore, frustration might not be met in other circumstances. Croke involved a third-party mandatory vaccination policy, where non-compliance with same meant no work could be provided to the non-compliant employee.
Whether a situation amounts to frustration will depend on specific factors, and every frustration analysis must be done on a case-by-case basis. For example, in the Croke case, if there was evidence that the Bell Policy was intended to be temporary or if the employee had indicated he intended to become vaccinated, it is likely the frustration test would not have been met.
Employers should seek legal counsel when navigating situations where an employee refuses to comply with a mandatory vaccination policy or before asserting frustration to ensure that appropriate steps are taken in the circumstances.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.