Court Finds that Mandatory Vaccination Requirement Caused Frustration of Employment Contract

The repercussions of the COVID-19 pandemic continue to fuel employment litigation across Canada. In particular, mandatory vaccination policies have been the subject of numerous legal challenges in recent years. Late last month, in Croke v. VuPoint Systems Ltd., the Ontario Superior Court of Justice released its decision in yet another mandatory vaccination policy case. The Croke decision is particularly interesting in that it considers and applies the doctrine of frustration of contract where an employee refused to comply with a mandatory vaccination policy imposed by his employer at the request of its client.

Background

In Croke, the plaintiff worked as a systems technician for VuPoint Systems Ltd. (“VuPoint”), a company providing satellite television and smart home installation services on behalf of Bell Canada and Bell ExpressVu (collectively “Bell”). VuPoint, a federally regulated employer, hired the plaintiff in May 2014. At the time his employment was terminated in October 2021, he was receiving a base salary of approximately $65,000 per year plus group benefits.

In early September 2021, Bell advised VuPoint that its installers would be required to receive two doses of an approved COVID-19 vaccine in order to enter the homes of its customers. In light of this, VuPoint proceeded to adopt a mandatory vaccination policy (the “Policy”). The Policy required the provision of proof of vaccination to VuPoint, and specified that non-compliant installers would be “prohibited from performing work for certain customers (including Bell)” and “may not receive the assignment of any jobs”. The Policy did not stipulate that non-compliance could result in termination of employment.

Following its adoption, the plaintiff was made aware of the Policy but remained non-compliant. As a result, he was unable to perform any work for Bell and VuPoint was unable to assign any work to him. On September 28, 2021, VuPoint informed the plaintiff that his employment would be terminated effective October 12, 2021. He received two weeks’ working notice, as well as almost $2,400 in severance pay. At no time did the plaintiff advise VuPoint that he intended to become compliant with the Policy. In fact, on October 9, 2021, after having received his notice of termination, he sent a letter to his supervisor indicating he would not disclose his vaccination status due to privacy laws and accusing VuPoint of discrimination.

Following the termination of his employment, the plaintiff commenced an action against VuPoint seeking damages for wrongful dismissal, as well as aggravated, punitive and/or moral damages. On a motion for summary judgment, the plaintiff argued that VuPoint could not be allowed to ignore its duty to warn him of the consequences of non-compliance with the Policy by characterizing the termination as “frustration of contract”. In his view, the dispute between the parties was really about his conduct, and it was within his rights to refuse to become vaccinated.

In response, VuPoint’s defence was that neither it nor the Plaintiff was responsible for the adoption of the Policy. There was no dispute that being able to work for Bell was a fundamental part of the Plaintiff’s employment contract and that his refusal to become vaccinated resulted in his complete inability to perform the duties of his position. Accordingly, VuPoint argued that Bell’s COVID-19 vaccination requirement, which was entirely out of VuPoint’s control and was not foreseen or contemplated by the parties, resulted in the frustration of the plaintiff’s employment contract.

Decision

Justice Pollak began by rejecting the plaintiff’s argument that he had not received “clear and unambiguous” warnings that his non-compliance with the Policy could result in the termination of his employment. Instead, she found that he was aware of this potential consequence for at least the two-week period following receipt of his notice of termination. Moreover, during that time, the plaintiff made clear statements that excluded the possibility that he might comply with the Policy in future.

Justice Pollak went on to review the law of frustration of contract. In particular, in Naylor Group Inc. v. Ellis-Don Construction Ltd., the Supreme Court of Canada held that:

Frustration occurs when a situation has arisen for which the parties made non provision in the contract and performance of the contract becomes “a thing radically different from that which was undertaken by the contract”…

 [When frustration of contract is argued] [t]he court is asked to intervene, not to enforce some fictional intention imputed to the parties, but to relieve the parties of their bargain because a supervening event… has occurred without the fault of either party.

Justice Pollak noted that where a contract has been frustrated, the parties are entitled to treat it as being at an end, with no legal obligation on either party to continue the contract and no entitlement as a result of its end. In the employment context, a person whose employment contract has been frustrated will therefore have no entitlement to notice of termination at common law.

In light of the foregoing, Justice Pollak found that Bell’s mandatory vaccination requirement meant that the plaintiff could not perform any work for VuPoint unless and until he chose to become vaccinated. The supervening event in this case was Bell’s implementation of a mandatory vaccination requirement on all installers, something that neither party could possibly have foreseen at the beginning of the employment relationship in 2014. As there was no indication that Bell intended to lift or modify its mandatory vaccination requirement, this supervening event appeared to be in place for the foreseeable future. Accordingly, although neither the plaintiff nor VuPoint defaulted on the employment agreement, Justice Pollak held that the plaintiff’s “complete inability to perform the duties of his position constitute[d] a radical change that struck at the root of the employment contract, resulting in the frustration of the contract”. Having already received his statutory entitlements under the Canada Labour Code, Justice Pollak ruled that the plaintiff was not entitled to any additional damages for common law reasonable notice.

In Our View

Interestingly, Justice Pollak found that VuPoint’s lack of control over Bell’s mandatory vaccination requirement made the case analogous to those in which employees are unable to work due to statutory or legal changes causing the employee to be unqualified to perform the duties of their position. In particular, Justice Pollak found that the analysis in the decision of Fraser Health Authority v. Hospital Employees’ Union (Tracy London Termination) was of assistance. In that case, Arbitrator Doyle compared a mandatory vaccination requirement to cases where employees were prohibited from working due to security clearance failures, ultimately finding that the principles of frustration of contract applied. Accordingly, a body of case law seems to be developing in which decision-makers have found that mandatory vaccination requirements imposed in response to third-party demands may cause the frustration of employment contracts.

For more information, please contact Steven Williams at 613-940-2797 or Marianne Abou-Hamad at 613-240-2170.