Frustration of Contract

[Andrea Grima]

#97972

Forum: Private

We have an employee who has been off on sick leave since Feb. 2025. When sick leave benefits ran out they applied for LTD- it was denied and was appealing. The 90 day period of appeal is coming up this month (Jan. 2026). They recently just sent me a new doctors note saying they are expected to make a full recovery and return by February 15 2026 with re assessments in 12 -14 weeks.
The concern is if they repeat the same as last year which was similar doctors notes stating they would return to work on a certain date and then not return.

If I were to send an expected return to work letter stating they are expected here on Feb. 15 as per the note I just received, and if the employee responds again with another note stating they will be off longer- at that point is it frustration of contract? This is senior manager role that we require in order to run the business. This absence creates a huge gap as we are a company of 31 employees with very little band width. She has not had much contact with the company over the last several months and is slow to respond.

Thank you

[Haley O’Halloran]

#97975

No — receiving another medical note extending the leave on or after Feb. 15 would not automatically amount to frustration of contract. However, you are approaching the zone where frustration may become arguable, particularly given:
-the length of absence (≈12 months),
-the seniority and operational impact of the role,
-the repeated pattern of return-to-work dates not materializing, and
-limited communication from the employee.

That said, terminating on frustration without very careful steps would carry legal risk, especially if the employee now has medical evidence suggesting recovery.

Key legal principles you need to know
1. Frustration of contract is a high threshold

In Canada, frustration due to illness generally requires that:
-The employee is unable to return to work in the reasonably foreseeable future, and
-There is no reasonable prospect of return, even with accommodation.

Courts look at:
-Total length of absence
-Medical prognosis (not just dates, but likelihood)
-Nature of the role (critical vs replaceable)
-Size of the employer and operational impact
-Past patterns of leave and extensions
-Whether the employer acted reasonably and patiently

A new medical note stating “full recovery expected by Feb. 15” works against frustration, not in your favour.

2. A single missed return-to-work date is not enough

Even if:
-You send a letter confirming Feb. 15 as the expected return date, and
-The employee later submits another note extending the leave,

That alone does not establish frustration, especially if the new note still suggests recovery within a defined timeframe (e.g., reassessment in 12–14 weeks). Courts are very cautious about employers who act immediately after an updated medical note.

3. The pattern does matter — but you must document it properly

What does strengthen your position over time is:
-Repeated projected return dates that are missed
-Vague or shifting medical information
-Lack of engagement or cooperation from the employee
-Increasing hardship to the organization

However, to rely on this, you must show that you:
-Requested clear, functional medical information
-Communicated expectations
-Considered accommodation and phased return
-Gave the employee opportunities to engage

If you jump straight to frustration without these steps, a court may see it as premature.

What you should do now (recommended approach)
Note: this does not count as legal advice. I am not a lawyer, and before proceeding, you should consider legal counsel.
1. Yes — send a Return-to-Work Expectation Letter

This is reasonable and appropriate.

The letter should:
-Acknowledge receipt of the doctor’s note
-Confirm Feb. 15, 2026 as the anticipated return date
-Ask the employee to confirm availability
-Request updated functional abilities information (not diagnosis)
-Flag that the role is operationally critical
-State that if the return date changes, you require timely medical clarification

Do not frame it as an ultimatum or threat of termination.

2. If another note arrives extending the leave

At that point, do not immediately terminate.

Instead:
-Review the new note carefully:
-Does it say unable to work at all?
-Is there a prognosis or just “reassess later”?
-Does it address ability to perform essential duties?

If vague, request clarification. Ask specifically:
-Is the employee capable of any work?
-Is a graduated return possible?
-Is there a realistic return window?

This step is critical to protecting yourself.

3. When frustration becomes more defensible

Frustration becomes more realistic if:
-The employee cannot provide a reliable return timeframe
-Medical evidence becomes indefinite or speculative
-Accommodations are not feasible
-The absence continues well beyond 12 months with no certainty
-The business impact is demonstrably severe

Even then, legal advice before termination is strongly recommended.

Important human rights overlay

Across Canada:
Illness = protected disability

You have a duty to accommodate to the point of undue hardship. For a 31-employee organization, undue hardship can occur sooner than in large employers — but you must show:
-Operational strain
-Inability to backfill
-Cost
-Impact on leadership and compliance

Document this carefully.

I hope this helps!
-HRInsider Staff

[Author]

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