The COVID-19 pandemic severely impacted workplaces across Canada. Employers in Ontario have continued to grapple with the ongoing challenge of safeguarding their employees' health while maintaining continuity of operations. Many employers imposed mandatory vaccination policies as a means of mitigating the spread of the virus within their organizations.
- Background: Caselaw Update: Reasonableness and Enforceability of Mandatory COVID-19 Vaccination Policies in the Workplace
- Further Background: Employees Must Disclose Vaccination Status where an Enforceable Vaccination Mandate Exists, but Employers are Cautioned to Protect Employee Privacy
An employment contract may be frustrated by the mandatory vaccination policy of a third-party as a recent decision of the Ontario Court of Appeal illustrates.
Frustration arises where unforeseen circumstances emerge which were not contemplated by the employment contract, causing the performance of the contract to become significantly different from what was originally agreed upon.1 As a result, it has become impossible to perform the original contract.2 In such a case, the employment contract is terminated on a "no fault" basis; releasing both the employer and the employee from any further obligation to perform.3
Croke v VuPoint System Ltd, 2024 ONCA 3544
VuPoint System Ltd. provides installation services for residential consumer television and internet services — almost entirely for Bell Canada. In fact, at the material time, VuPoint's contracts with Bell Canada accounted for more than 99% of its business. Alan Croke was employed as a technician for VuPoint.
In 2021, Bell implemented a mandatory vaccination policy requiring of VuPoint that all of its technicians working on Bell projects must be vaccinated against COVID-19. Thus, VuPoint instituted its own mandatory vaccination policy for its employees, including Mr. Croke.
Mr. Croke refused to disclose his vaccination status to VuPoint. Consequentially, he was terminated by way of frustration of contract. Mr. Croke brought an action for wrongful dismissal against VuPoint, but the action was dismissed on summary judgment.
On appeal, the Court upheld the motion judge's finding that the contract was frustrated. The introduction by Bell of a mandatory vaccination policy amounted to the introduction of a new external requirement upon Mr. Croke which he did not satisfy; i.e., the new policy was the "supervening event."
As a result of the supervening event, performance of the employment contract became something radically different than what the parties had contracted for — given that Mr. Croke was no longer qualified to undertake the work for which he was hired. That change was not foreseeable when the contract was formed between Mr. Croke and VuPoint. The supervening event was something for which VuPoint had neither control nor advance warning.
Although Mr. Croke argued that he was actually terminated for the cause of refusing to comply with the new requirement, the Court held that frustration did not turn on voluntariness. The Court specifically addressed and dismissed the notion that "a contract is not frustrated if the supervening event results from a voluntary act of one of the parties."5 While it is true that Mr. Croke voluntarily chose not to adhere to the mandatory vaccination policy, his decision did not constitute the supervening event itself. Instead, it was the implementation of the policy that served as the supervening event. Consequently, the contract was frustrated regardless of Mr. Croke's subsequent actions in response to the policy.
The termination by way of frustration was valid based on the unforeseeable radical alteration of the contract, and despite being well aware of the policy, Mr. Croke failed to disclose his vaccination status to VuPoint.
Conclusion
Croke v VuPoint System Ltd demonstrates that the unexpected imposition of a third party's mandatory vaccination policy can significantly change the contractual obligations of the parties involved, justifying an employer's termination of the employment contract due to frustration.
Although in this case, it was VuPoint's own mandatory vaccination policy that affected Mr. Croke, this requirement was implemented in response to a direct mandate from the client, which constituted the vast majority of its business. It remains to be seen how courts will decide cases where the employer itself has full control over the vaccination policies they introduce by their own sole intention and not as a result of some outside force.
The legal landscape regarding mandatory COVID-19 vaccination policies in the workplace continues to evolve. Employers face the challenge of balancing employee health and safety with operational needs, often resorting to mandatory vaccination policies to mitigate the spread of the virus.
Further takeaways:
- Employers and employees should understand the distinction between frustration of contract and termination with or without cause.
- Employers must ensure that mandatory vaccination policies comply with relevant laws, regulations, and contractual obligations, while respecting employees' rights.
- Employers should communicate vaccination policies transparently, including the rationale behind them, consequences for non-compliance, and available avenues for seeking accommodations or alternatives.
- Employees should actively seek clarification on vaccination policies, understand their rights and options, and consider compliance with policy requirements to mitigate potential repercussions.
By proactively addressing legal and ethical considerations, employers can foster a safe and inclusive work environment, while employees can make informed decisions to safeguard their well-being and rights in the workplace.
Footnotes
1. Naylor Group Inc v Ellis-Don Construction Ltd, 2001 SCC 58 (CanLII) at para 53, citing Peter Kiewit Sons' Co v Eakins Construction Ltd., 1960 CanLII 37 (SCC) at 368, citing Davis Contractors Ltd v Fareham Urban District Council, [1956] AC 696 (HL), at 729.
2. GHL Fridman, The Law of Contract in Canada, 4th ed (Scarborough: Carswell, 1999) at 677.
3. John D McCamus, The Law of Contracts, 3rd ed (Toronto: Irwin Books, 2020) at 656.
4. Croke v VuPoint System Ltd, 2024 ONCA 354 (CanLII).
5. Fram Elgin Mills 90 Inc v Romandale Farms Limited, 2021 ONCA 201 (CanLII) at para 230.
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