Case In Point

Court of Appeal Confirms Employment Contract Frustrated by Failure to Comply with Mandatory Vaccination Requirement

Case In Point

Court of Appeal Confirms Employment Contract Frustrated by Failure to Comply with Mandatory Vaccination Requirement

Date: May 9, 2024

In Croke v. VuPoint Systems Ltd., the Ontario Court of Appeal upheld a motion judge’s decision that an employee’s failure to comply with his employer’s vaccination requirements amounted to a frustration of contract, disentitling him to wrongful dismissal damages at common law. The lower court decision was discussed in our Case in Point of March 10, 2023 and our FTR Now Year in Review of January 4, 2024.

The employer, VuPoint, provided installation services for Bell Canada and Bell ExpressVu (Bell). Such services to Bell accounted for over 99% of VuPoint’s income. The employee exclusively worked on Bell contracts for VuPoint.

Bell implemented a mandatory vaccination policy (the Bell policy) that would apply to all of its subcontractors, including VuPoint. It sent a letter to VuPoint stating that it “requires that all personnel who work at or visit any Bell location or interact in-person with Bell customers be fully vaccinated by September 20, 2021.” In turn, VuPoint implemented a mandatory vaccination policy (Policy). The Policy required installers be vaccinated against COVID-19 and provide proof of vaccination. 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. The Policy did not address termination of employment.

The employee refused to disclose his vaccination status and was thereby ineligible to work for the foreseeable future pursuant to the Policy. VuPoint then advised the employee that his employment would terminate on two weeks’ notice, due to his refusal to comply with the Policy. In response, the employee made it clear that he did not intend to become vaccinated.

The employee was terminated and launched a wrongful dismissal action. The motion judge dismissed the employee’s action on summary judgment, holding that the employee’s failure to comply with the Policy frustrated the employment contract, and therefore no damages were owing.

On appeal, the Court of Appeal upheld the motion judge’s decision. The Court first reviewed the law of frustration, noting that a party asserting frustration must establish that there was a “supervening event” that:

(i) radically altered the contractual obligations

(ii) was not foreseeable and for which the contract does not contemplate

(iii) has not been caused by the parties

The Court held that the “supervening event” was the implementation of the Bell policy, which the Court held was akin to a new regulatory requirement imposed on VuPoint. The Court noted, “Absent vaccination, VuPoint’s employees were ineligible to work on Bell projects, which was nearly all of VuPoint’s work.” The supervening event was not, as argued by the employee, the employee’s voluntary decision not to comply with the Policy.

The Court went on to hold that the motion judge reasonably concluded that the “supervening event” (the Bell policy that necessitated VuPoint’s Policy) was a radical change to the terms of employment that was not contemplated at the time the parties entered into the employment contract in 2014.

The Court also found no error with the motion judge’s conclusion that the Bell policy, as the supervening event, was outside of the control of VuPoint, and that “VuPoint had no obligation to take other non-disciplinary measures before resorting to termination.”

Key Takeaways for Employers

The motion judge’s decision was a novel decision for non-unionized employers. In upholding the decision, the Court of Appeal affirmed there may be circumstances in which an employment contract may be frustrated as a result of non-compliance with a COVID-19 vaccination policy.

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