The Ontario Court of Appeal has affirmed that an employee’s illness or disability will frustrate an employment contract only in circumstances where the condition is sufficiently enduring to prevent the employee from performing the essential duties of the employment within a reasonable time. Temporary limitations that can reasonably be accommodated will generally not frustrate the contract. In Hill v 1359768 Ontario Inc. (B&B Towing), 2026 ONCA 577 (CanLii), the Ontario Court of Appeal reviewed a trial court decision involving a towing services company that was found to have constructively dismissed the employee by demoting him from the managerial position of road boss to a tow truck driver. The Court of Appeal did not find frustration of the employment contract in this case and affirmed the legal test to determine when this can occur. Legal Test: “The question is whether the employer has proven that the employee’s sickness, injury or … Read More
A Successful Constructive Dismissal Claim in Hagholm v. Coerio Inc.
Constructive dismissal occurs when an employee is indirectly and effectively dismissed from the position or terms he/she had previously agreed formed the employment. Without the consent of the employee, a substantial alteration is presented that fundamentally changes the terms of the agreed upon contract. Hagholm v. Coerio Inc. represents a successful claim for constructive dismissal. The respondent had entered into her employment on the understanding that she could work from home three days a week. When this condition was changed, the respondent claimed constructive dismissal and ceased coming to work. The Motion Judge, on a motion for summary judgment, found that there was constructive dismissal because this was an essential term and the appellant arbitrarily withheld a bonus from the respondent. The Court of Appeal also confirmed that the respondent was not required to mitigate her damages for the appellant’s breach of contract in these circumstances. Also in this case, the … Read More