Failure to vaccinate found to frustrate contract

Over three years after the onset of the COVID-19 pandemic, and we are beginning to see Ontario civil court caselaw emerge on mandatory COVID-19 vaccination policies (MVPs). In the recent case of Croke v. VuPoint Systems Ltd., 2023 ONSC 1234, the court grappled with a wrongful dismissal case arising from an employee's refusal to comply with their employer's MVP.

Facts:

The employer in this case, VuPoint, provided installation services on behalf of Bell Canada and Bell ExpressVu (collectively, "Bell"). Over 99% of VuPoint's annual income came from Bell. The employee, Mr. Croke, worked for VuPoint as a Systems Technician or Satellite Technician. In this role, Mr. Croke worked only for Bell.

On or around September 8, 2021, Bell informed VuPoint that all installers would be required to receive two doses of an approved COVID-19 vaccination. Bell's policy did not provide any alternative options to vaccination, and Bell reserved the right to audit compliance with the policy. Failure to comply with the policy would constitute a material breach of the supply agreement between Bell and VuPoint.

As a result, VuPoint implemented its own MVP, requiring all its installers, including Mr. Croke, to be vaccinated against COVID-19 and provide proof of vaccination. It did not expressly state failure to comply would result in termination of employment, but did indicate non-compliant installers would be "prohibited from working for certain customers (including Bell)" and "may not receive the assignment of any jobs".

On September 28, 2021, VuPoint provided working notice to Mr. Croke of his termination, effective October 12, 2021. During the working notice period, Mr. Croke protested the MVP and stated he would never be vaccinated, among other things.

Mr. Croke subsequently commenced a wrongful dismissal lawsuit, claiming he was entitled to pay in lieu of reasonable notice at common law. VuPoint argued no notice was owing as the employment relationship was legally frustrated. It argued Bell's imposition of its MVP was out of its control, and Mr. Croke's non-compliance meant he lacked a necessary qualification to perform his duties.

Outcome:

The judge sided with VuPoint, holding the employment relationship was frustrated. Mr. Croke was not entitled to pay in lieu of reasonable notice.

Analysis:

The judge began by reviewing the law on frustration. Frustration occurs "when a situation has arisen for which the parties made no provision in the contract and performance of the contract becomes a thing radically different from that which was undertaken by the contract."[1] Where a contract is frustrated, both parties will be relieved of their obligations under the contract. In the employment context, that means an employer does not have to provide any common law notice of termination. Previously, the courts have found frustration to occur when an employee loses a license or registration, such that they can no longer perform all or a significant portion of their employment duties.

The judge found the same reasoning should apply here. Here, the imposition by Bell, a third party, of its MVP meant Mr. Croke could not perform any work for VuPoint unless he was vaccinated. Bell's policy resulted in Mr. Croke "lacking a necessary qualification to perform any of his duties." Further, the intervening event of the global COVID-19 pandemic and, in turn, Bell imposing a MVP that applied to all installers, could not have been foreseen by either VuPoint or Mr. Croke at the start of his employment in 2014.

Interestingly, the judge held there was not default by either Mr. Croke or VuPoint. VuPoint had to comply with Bell's policy. The fact Mr. Croke could have chosen to be vaccinated did not mean he was in default, as the frustrating event was a result of a decision by Bell, not Mr. Croke or VuPoint.

As a result, the judge concluded that Mr. Croke's "complete inability to perform the duties of his position for the foreseeable future" was a radical change, struck at the root of the employment contract, and resulted in the frustration of the contract.

Takeaways:

This case is unique for a couple reasons. First, the imposition of VuPoint's MVP was a direct result of a third party, Bell, requiring that all installers be vaccinated. Second, although Mr. Croke was employed by VuPoint the reality was he worked only for Bell. Third, VuPoint effectively only provided services to Bell, thus there was no alternative installation work that it could assign to Mr. Croke or other non-compliant employees.

Each of those factors were relevant to the finding that the contract was frustrated. It is questionable whether the same conclusion would have been reached had VuPoint chosen to implement a MVP of its own volition, rather than to comply with Bell's requirement, or if VuPoint had other clients that Mr. Croke could have worked for that did not require proof of vaccination.

Nonetheless, this case highlights the fact specific approach that the courts are taking to MVP cases. See also our blog post, Civil court success for mandatory COVID-19 vaccination, where we discussed the first BC civil court decision on the issue. The courts are alive to the unique factual matrix which may underpin the implementation of a MVP, and employers should also be. Employers who still have MVPs are encouraged to regularly review their policy in light of the current COVID-19 climate and their workplace needs.

If you have any questions about your workplace policies, please reach out to a member of the Lee Workplace Law team. We would be happy to answer any questions you might have.

[1] Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58 at para. 53