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In its recent decision, Gahagan v. James Campbell Inc. the Human Rights Tribunal of Ontario ("HRTO") seems to have lowered the hurdles faced by employers in Ontario when attempting to establish frustration of contract following an employee’s extended period of absence due to a disability.

Cathy Gahagan alleged in her first Application to the HRTO, that her former employer, James Campbell Inc. ("employer"), which operates several McDonald's restaurants in eastern Ontario, had discriminated against her with respect to employment on the grounds of disability when it failed to accommodate her physical restrictions resulting from a workplace injury. In a subsequent Application, she also alleged that the employer had terminated her and failed to complete the Employer's Statement for her LTD Application in reprisal for filing her first Application under section 8 of the Ontario Human Rights Code ("Code").

Ms. Gahagan had worked at a small McDonald's location for seven years, mostly at the restaurant's grill station. In 2009, Ms. Gahagan twisted her back while lifting a pan from under a vat of French fries. A WSIB Return to Work Specialist determined that Ms. Gahagan had physical restrictions that the employer was unable to accommodate given the small size and fast-paced nature of the workplace. For example, she could not twist or bend, lift heavy items, or stand for significant periods of time. She was granted full loss of income benefits from the Workplace Safety and Insurance Board ("WSIB"). Her benefits were terminated in mid-2011 when her WSIB case manager determined that she was fully restored to her per-injury earnings based on her completion of a labour market re-entry ("LMR") training program in customer service. At the time of her termination in 2011, Ms. Gahagan had not returned to work in almost two and a half years.

The HRTO dismissed Ms. Gahagan's complaints, finding that the accommodations she had suggested were not reasonable given the small size of the restaurant, as well as health and safety concerns. In particular, the employer was not required to create a new position in order to accommodate under the Code.

The Tribunal also found that the employer had terminated Ms. Gahagan for frustration of contract because she could not perform the essential duties of her job due to her significant permanent medical restrictions that remained in place at the time of the hearing. In addition, it found that the employer had delayed filing the LTD application because it had mistakenly believed it wasn't obligated to, and there had been no prejudice to Ms. Gahagan's receipt of LTD benefits. There was no evidence in either instance to support that the employer had intented to retaliate against Ms. Gahagan because she had filed an Application with the HRTO.


Establishing frustration of contract following an employee's extended period of absence due to a disability is usually an uphill battle for employers.

Notably, the facts in this case didn't appear to be particularly in the employer's favour. There was no evidence put forward in support of the employer’s attempts at accommodation, and the WSIB return to work specialist had indicated that the employer had failed to cooperate in the return to work process. There also did not appear to be any evidence before the Tribunal that the employer had obtained an independent medical examination ("IME") with up to date medical information and prognosis prior to dismissing her. These are both pieces of evidence that courts and other decision makers typically look for in these types of cases. On the other hand, Mrs. Gahagan had been unable to return to work for two and a half years and there was no prospect of return in the foreseeable future

The HRTO seemed to rely heavily on the evidence of Ms. Gahagan's eligibility for receipt of LTD and CPP disability benefits, both of which required her to confirm that she was unable to perform her job due to a severe and prolonged disability. CPP in particular is only granted to individuals with a permanent disability. The decision was also impacted by the fact that James Campbell Inc. was a small employer, making accommodation difficult, and that Ms. Gahagan was in the process of appealing the WSIB's decision that she was employable, which in the Tribunal's view was the proper forum for her complaints.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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