Refusal to Vaccinate Can Lead to Frustration of Contract

In Croke v. VuPoint System Ltd., 2024 ONCA 354, the Ontario Court of Appeal upheld a lower court ruling dismissing a wrongful dismissal claim by an employee who was terminated after refusing to comply with a vaccination policy.

Background and Lower Court Ruling

The appellant, Mr. Croke, worked as a systems technician for VuPoint, a company that installs residential TV and internet services on behalf of Bell Canada and Bell ExpressVu (collectively, “Bell”). VuPoint derived over 99% of its annual income from Bell.

In September 2021, Bell introduced a mandatory vaccination policy requiring all technicians working on its projects to be vaccinated against COVID-19 by September 20, 2021. VuPoint adopted a similar mandatory vaccination policy, requiring all installers to be vaccinated against COVID-19 and to provide proof of vaccination. VuPoint’s policy stated that employees who failed to comply would be “prohibited from working for certain customers (including Bell)” and “may not receive the assignment of any jobs.”

When Mr. Croke refused to disclose his vaccination status — which was deemed to mean he was unvaccinated — he was rendered ineligible to continue working under the Bell contract. As such, on September 28, 2021, VuPoint provided Mr. Croke two weeks’ working notice of his termination. Mr. Croke commenced an action for wrongful dismissal against VuPoint, which countered that no notice was owing, as the employment relationship had been legally frustrated by the Bell policy.

At the Ontario Superior Court of Justice, the motion judge sided with VuPoint found that the employment relationship was frustrated by the implementation of Bell’s policy, which was a “supervening event” not contemplated or caused by the parties. Therefore, no damages were owing.

Court of Appeal Decision

Mr. Croke appealed the decision to the Ontario Court of Appeal, which upon hearing the case upheld the decision of the lower court.

The Court noted the following three-part test for frustration, and that the party alleging frustration must establish that there was a “supervening event” under the following three-part test:

 (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 in this case, the supervening event that frustrated the contract was the imposition of Bell’s mandatory vaccination policy, the effect of which was akin to the imposition of a new regulatory requirement and was not, as argued by the appellant, Mr. Croke’s voluntary decision not to comply.

In assessing whether the supervening event resulted in a “radical change” to the contractual obligations, the Court identified that the duration of the supervening event, or of its impact on the employment relationship, ought to be considered. Here, Mr. Croke informed VuPoint of his intention to never be vaccinated and Bell never provided an end date for its policy, or any evidence that the policy was a temporary measure.

On the second branch of the test, the Court found that the advent of the pandemic and Bell’s response constituted an exceptional event that the parties could not reasonably have foreseen when Mr. Croke was hired in 2014.

Lastly, Mr. Croke argued that the supervening event was not the Bell policy but the employer’s choice to respond to the Bell Policy by terminating his employment. The Court rejected this argument and upheld that the Bell policy, as the supervening event, was outside of VuPoint’s control. It clarified frustration and just cause dismissals are fundamentally distinct: As a “no fault” termination of the contract, where frustration is established, it has the effect of discharging the agreement – thereby releasing the parties from any further obligation to perform. Remedies applicable to misconduct, such as progressive discipline, suspension or warnings, have no application in the frustration context.

Consequently, VuPoint was entitled to treat the contract as at an end on a “no fault” basis.

Key Takeaways for Employers

VuPoint is the first Court of Appeal decision to affirm that there are circumstances wherein non-compliance with a COVID-19 vaccination policy may give rise to frustration of the employment contract.

Important to note, however, is that the doctrine of frustration may not apply where an employee shows willingness to comply with a mandatory vaccination policy prior to the termination of their employment, or where a mandatory vaccination policy is temporary.

It is also important to remember that Ontario courts have yet to decide on the availability of a frustration argument to employers who bear complete control over the imposition and implementation of their own vaccination policies.

Think you have a case for frustration of contract? The team at Goulart Workplace Lawyers can help you navigate the nuance. Please contact us if you require support.