The Ontario Divisional Court has confirmed that an employer’s duty to accommodate ends when an employee’s disability becomes permanent and thereby frustrates the contract of employment.
“The decision in Katz v. Clarke is a breath of fresh air for employers because it reaffirms that employees seeking accommodation can’t merely inform their employers of their desire to return to work, but must also provide evidence of their ability to work,” says Sari Springer, managing partner at Littler LLP. “Although employers are not obligated to anyone for life, they are always petrified when they have to make a tough and unpleasant decision about whether to terminate a disabled, vulnerable employee.”
Essentially, the decision adopts the policies of the Ontario Human Rights Commission relating to the duty to accommodate. “Although the employer is in the best position to canvass accommodation options, the employee must participate in that process,” says Ellen Low of Ellen Low Employment Law.
Unfortunately, that’s precisely what Eugene Clarke, a front store manager at a retail drugstore, failed to do. After working at Katz Group Canada Ltd. for eight years, Clarke broke a kneecap and, by 2013, had been off the job for five years.
At that point, Great-West Life Assurance Co., the employer’s disability carrier, which had approved short- and long-term disability coverage, advised Katz that the medical information it had accumulated indicated Clarke was unable to perform the essential duties of his position and there was no reasonable expectation that he could do so in the foreseeable future.
Six months later, Katz wrote to Clarke informing him his employment had been frustrated and that he would be terminated at the end of 2013.
It took three months for Clarke, through his lawyer, to reply that he had been “working very hard so that he can return to his former employment.” Katz followed up with two letters requesting medical information outlining Clarke’s estimated date for return to work and his prognosis for recovery.
When Clarke didn’t reply, he was terminated. Clarke sued for wrongful termination, alleging he had lost his job because of his disability in breach of the Ontario Human Rights Code.
During the litigation, the parties agreed the medical documentation indicated Clarke was totally disabled and had no reasonable prospect of returning to work in any capacity in the foreseeable future. On his examination for discovery, Clark admitted he couldn’t work.
The employer moved for summary judgment, but the motions judge decided there were genuine issues that required a trial. On appeal, however, the divisional court disagreed and granted summary judgment dismissing Clarke’s lawsuit.
The court ruled the employer’s duty to accommodate is triggered only when an employee both communicates the wish to return to work and provides evidence of the ability to return to work that the employer could accommodate without undue hardship. But when the employee’s disability is permanent, the employment contract is impossible to perform and therefore frustrated, ending all parties’ obligations without penalty.
“It is ‘inherently impossible’ to accommodate an employee who is unable to work,” the court stated.
According to Low, employers should also welcome the decision because it indicates this type of litigation can be resolved without a trial. “This case breaks ground on the availability of summary judgment in employment contract frustration cases,” she says. “In the right circumstances, including cases where the evidence about the permanence of the disability is undisputed, summary judgment dismissing the action may be granted.”