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The Frustration of Frustration of Contract: Discharging for Innocent Absenteeism Hits Another Roadblock

Practice Areas: Human Resources Support

When an employee needs to access long term disability benefits (“LTD”), employers should be mindful of the various pitfalls that can arise in trying to successfully manage innocent absenteeism. The employment relationship must be carefully managed to maintain contact with the absent employee; obtain updated medical; and, to ensure the employee maintains their benefit contributions. CCPartners encourages employers to seek advice as soon as possible during this process as it is important to proactively address concerns and challenges as they arise.

Typically, an employer’s main concern when an employee is away on a long term absence is when or if the employee will return to work. Traditionally, arbitrators and the courts have allowed employers to claim frustration of contract and terminate the employment relationship when an employee’s innocent absenteeism is excessive and there is no reasonable prospect of return in the foreseeable future. There must be no reasonable prospect of return to either the employee’s regular job or an accommodated position. Frustration has generally not attracted human rights breaches as long as there is no reasonable accommodation that could result in the employee returning to work. However, a recent BC arbitration decision, Langley Township v Canadian Union of Public Employees Local 403 (McPhillips), has created a wrinkle in this approach.

In Langley, Arbitrator McPhillips ordered the employer to reinstate three employees that it had discharged for innocent absenteeism. Each of the employees in dispute was off on LTD and was found to be totally disabled from any occupation. The employer was able to clearly demonstrate that the level of absenteeism was excessive and there was no prospect of return to work in the foreseeable future. As a result the employer considered the cost of continuing the employees’ other benefits (such as dental, extended health and life insurance) and found that discharges would result in a net savings of $10,000.  The terminations went ahead as the employer believed the contracts to be frustrated.

At arbitration the decision to end the employment relationship was challenged as being arbitrary and discriminatory. The employer conceded (rightfully so) that there was prima facie discrimination as the employees were terminated because of their disabilities; but, it defended the terminations by claiming a bona fide occupational requirement. The Arbitrator rejected this position as the employer lacked a policy outlining when a discharge would occur for innocent absenteeism and the decision to discharge was based on a desire to save money. The Arbitrator relied on the fact that there was no change in status or frustrating event that prompted the employer to proceed with the terminations. Instead it was found that the decision was made arbitrarily at a random point in time.   It is our view that the arbitrator failed to consider that the disability itself was the frustrating event which was supported by the medical documentation that confirmed the employees were totally disabled and would not be able to return to work in any capacity in the foreseeable future.

Employers should keep this decision in mind when managing an employee who is absent on LTD. Employers would be advised to consider what event has triggered the decision to discharge. It may assist employers to develop a policy outlining how they will approach innocent absenteeism. The lawyers at CCPartners are experienced in managing innocent absenteeism and can assist you with this process.

This decision is currently being appealed to the British Columbia Court of Appeal and the matter will be heard on September 14 and 15 2016. We will continue to monitor this decision and update you on the Court’s decision once it is available.


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