Employment Law: Frustration of Contract

What is frustration of a contract? Frustration of contract is where a particular event or circumstance arises that renders an employment contract fundamentally different from what was originally intended by the parties, the contract may be terminated without liability. Frustration will only apply where the event or situation was unforeseeable and through no fault of either party. Frustration must be determined on a case-by-case basis.

What Is Frustration Of Contract - KCY at LAW

How To Prove Frustration of Contract?

The onus is on the employer to prove the contract has been frustrated. Should the employer be successful in alleging there has been a frustration of contract, the employer is not obliged to give the employee common law notice or pay in lieu of notice. The employer’s only obligation would be to pay the employee his or her minimum entitlements under the relevant employment standards legislation (for example, the Employment Standards Act or Canada Labour Code).

Examples of Frustration of Contract

Some examples of frustration have included illness, death, or a catastrophic event that was unforeseeable. Employers may take the position that the contract is frustrated on account of the employee is receiving long-term disability benefits. Despite continuing to receive LTD benefits, however, this may not equate to frustration of contract. Other employers include clauses in contracts which state that the employee is deemed terminated if he or she cannot work because of illness for 90 days, which may violate the Ontario Human Rights’ Code.

Examples of Frustration of Contract - Employment Law Lawyer

Frustration of Contract Experts

Whether you are an employee whose employment is being terminated due to frustration or you are an employer wondering if an employee’s employment has been frustrated, we at KCY at LAW have the frustration of contract experience and employment law expertise necessary to effectively assist you in order to ensure your legal rights are properly looked after.

Call KCY at LAW at 905-639-0999 or contact us online and book your consultation right now!

Employment Law – Restrictive Covenants

One way that employers attempt to minimize the impact a former employee may have on their business is through the use of post-employment covenants. Specifically, these covenants may prevent or restrict an employee from competing against the employer or solicit the employer’s employees or customers. The general approach of the Courts regarding these restrictive covenants is that they are considered to be a restraint of trade and are contrary to public policy, save and except for a few rare circumstances.

Employment Law – Enforceable Restrictive Covenants

In order for a restrictive covenant to be enforceable, it must be reasonable between the parties and with reference to the public interest. There must also be a balance between open competition and the employer’s right to protect its confidential information, considering the nature and character of the employment. For example, a non-competition clause that is too broad in its temporal and geographical scope will likely be deemed to be unenforceable by the Courts.

Enforcable Restrictive Covenants - Employment Lawyers - KCY at LAW

If the clause is broad in the type of activity it describes by prohibiting competition generally and not in a more specific manner, it will also likely be deemed unenforceable by the Courts. Ambiguity or uncertainty as to the interpretation of the clause can also lead to it being set aside. The character of an employee’s employment may also have a bearing on whether or not the clause is upheld by the Courts, as it has been held previously that justification for a broader prohibition on competition may apply to those who are much higher up in the Company hierarchy at the time of termination.

Drafting Restrictive Covenants

Given the above, it is crucial for employers to draft restrictive covenants that conform to the general factors and principles that the Courts would consider when upholding said covenants. Even if a portion of the clause is unreasonable, the Courts will not modify the clause or remove the problematic parts, but rather strike it in its entirety. When a clear, reasonable clause has been created to address the particular circumstances of the employment relationship, the employer will have a much better chance of it being enforced.

Drafting Restrictive Covenants - Employment Law Advice - KCY at LAW

Employment Law Experts

We at KCY at LAW have the employment law experience and expertise necessary to effectively assist employers and employees to ensure your legal rights are properly looked after.

Contact KCY at LAW right now at 905-639-0999 or contact us online to book a consultation!

What Is Just Cause For Dismissal? Things You Need to Know

When an employee is terminated from his or her employment, it can either be a “termination with cause” or a “termination without cause”. If an employer has “cause” to terminate an employee’s employment, that employer can terminate the employee without providing any notice or paying the employee anything instead of giving notice. An employee may also be ineligible to collect employment insurance benefits. What constitutes “cause” for termination, however, is typically assessed on a case-by-case basis.

What Is Just Cause For Dismissal?

The Courts have held that an employer may terminate an employee’s employment “with cause” if the employee is “…guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employer’s business, or if he has been guilty of willful disobedience to the employer’s orders in a matter of substance.”

What is Just Cause for Dismissal - KCY at LAW

When deciding whether an employer has “cause” to terminate, the Courts look at two primary issues: 1) whether the misconduct may be proven; and 2) whether the nature or degree of the misconduct is sufficient to dismiss the employee without any notice or pay in lieu thereof.

  • Did the employee misconduct result in a breakdown of the employment relationship?
  • What role does the employee have with the employer?
  • How senior is the employee?
  • What is the nature of the employer’s business?
  • Did the employer give a warning before they terminated the employee?
  • Did the employer condone the conduct or not raise an issue with the conduct previously?

Basis for Casual Employment Termination - Just Cause for DismissalThese are all issues that need to be considered when determining whether the employer has “just cause”. If it can be proven that an employer has alleged “just cause” in order to avoid having to pay the employee any form of notice or severance, the Court may order the employer to pay punitive damages for bad faith.

Basis For Casual Employment Termination

While there is no hard-fast rule as to what constitutes “cause”, the case-law has outlined a number of categories of misconduct that have formed the basis for a causal termination. Some examples include:

  • Insubordination;
  • Insolence;
  • Incompetence;
  • Harassment; and
  • Dishonesty.

Experienced Employment Law Lawyers

Whatever the case may be, we at KCY at LAW have the experience and expertise necessary to effectively assist both employers and employees to ensure your legal rights are properly looked after.

Contact KCY at LAW right now at 905-639-0999 or contact us online and book a consultation!