In Croke v. VuPoint System Ltd., 2024 ONCA 354, the Court of Appeal for Ontario applied the doctrine of frustration to uphold the termination of the employment contract of an employee, who refused to comply with a mandatory COVID-19 vaccination policy imposed on an employer by a client providing over 99% of the employer's work.
Facts
The Plaintiff, Croke, worked as a systems technician with VuPoint. VuPoint provided satellite television and smart home installation services on behalf of Bell. Bell provided more than 99% of VuPoint's annual income. Through his employment with VuPoint, Croke had only performed work for Bell. Other than Bell's work, VuPoint did not have any other work for Croke.
In 2021, Bell implemented a mandatory vaccination policy requiring VuPoint's installers to be vaccinated against COVID-19 and to provide proof of said vaccination ("Bell's Policy"). Bell stipulated that non-compliance would constitute a material breach of its agreement with VuPoint. Consequently, VuPoint adopted a mandatory vaccination policy requiring all its installers to be vaccinated and to provide proof ("VuPoint's Policy"). VuPoint's Policy stipulated that VuPoint would not assign work to non-compliant installers.
Croke refused to disclose his vaccination status as required by VuPoint's Policy, which refusal was deemed to mean that he was unvaccinated. VuPoint, therefore, terminated Croke's employment. During the termination notice period, Croke advised VuPoint that he would never get vaccinated. Croke brought this wrongful dismissal action against VuPoint and sought summary judgment.
VuPoint's defence was that Croke's employment was frustrated by the implementation of Bell's Policy, which was completely beyond VuPoint's control. VuPoint submitted that without proof of vaccination, Croke did not possess the qualification and was ineligible to work for the foreseeable future.
Croke argued that the doctrine of frustration could not be applied for the following reasons: (i) since frustration could not be induced by a voluntary act, his voluntary decision to remain unvaccinated could not be the basis for termination; (ii) there was no evidence that his contract of employment was impossible to perform at the time of termination; and (iii) VuPoint failed to warn him (as required under common law) of the consequence of failure to comply with VuPoint's Policy, but instead, mischaracterized his termination as frustration of contract rather than as termination for cause.
Decision of the Ontario Superior Court of Justice
The ONSC agreed with VuPoint that Croke's employment contract was frustrated by the implementation of Bell's Policy, which was a supervening event not contemplated by the parties. Neither VuPoint nor Croke could have foreseen the implementation of Bell's Policy at the time Croke's employment was signed. The ONSC likened the effect of Bell's Policy on the employment contract to that of a statutory change imposing additional requirements on an employee, thereby rendering such employee unqualified for the job, unable to work, and thus frustrating the employment contract. With respect to Croke's contention on the impossibility to perform the employment contract, the ONSC found that VuPoint could not modify Croke's employment contract to keep him employed or impose a lesser disciplinary measure. Any attempt to modify Croke's duties or impose a lesser disciplinary measure would have radically altered the employment contract. His unequivocal decision to never get vaccinated meant that he could never perform the duties for which he was employed.
With respect to Croke's contention that he was not warned, the ONSC found that Croke knew that the effect of non-compliance was termination by virtue of his knowledge of Bell's Policy, the unavailability of alternate work for him since he only ever performed work for Bell, and his failure to express an intention to be vaccinated during the notice period.
The ONSC denied Croke's motion for summary judgment and dismissed the action.
Decision of the Ontario Court of Appeal
Croke appealed the ONSC's decision to the ONCA. The ONCA agreed with all the ONSC's finding and upheld the dismissal of the action.
In addition to findings by the ONSC, the ONCA further examined whether Croke's voluntary choice to remain unvaccinated prevented the application of the doctrine of frustration. The ONCA ruled that Mr. Croke's voluntary choice not to get vaccinated did not prevent the application of the doctrine of frustration as it was not the supervening event. The implementation of Bell's Policy was the supervening event and the application of the doctrine of frustration was not dependent on Mr. Croke's conduct. The ONCA's decision was that it was not Croke's choice or conduct that rendered him unable to work but the introduction of the new requirement by Bell's Policy, which he did not comply with.
Croke's choice or conduct could however be relevant in determining whether the implementation of Bell's Policy (i.e., the supervening event) radically altered the contractual obligations under Croke's employment contract. The ONCA stated that the employment contract may not have been radically altered if Bell's Policy was only a temporary measure or if Croke had expressed an intention to be vaccinated but just could not do so before Bell's Policy came into effect. The indeterminacy of the duration of application of Bell's Policy as well as Croke's resolve to never get vaccinated were key factors in the conclusion that the employment contract was radically altered.
Takeaways
The doctrine of frustration may not apply where an employee is willing to comply with a mandatory vaccination policy before termination of employment. The doctrine of frustration may also not apply where the mandatory vaccination policy is momentary.
Employers and employees respectively seeking defences and remedies to terminations on account of non-compliance with mandatory vaccination requirements should note that the mandatory vaccination policy in this case was completely beyond the control of the employer. The courts in Ontario are yet to decide on the availability of the defence of frustration to an employer with complete control over imposition and implementation of its mandatory vaccination policy.
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