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Estate of Cristian Drimba v Dick Engineering Inc.

With more employees working later and later before retiring a previously uncommon problem is occurring more frequently. When an employee dies before retirement, does their employer owe them statutory notice provisions? Management at Dick Engineering sought to deny an employee their last notice wages, and were found to have been unjust by the Court. In many cases where still employed persons pass away they will be owed notice.

A contract is frustrated when it becomes impossible to perform. Where an employment contract is frustrated, an employee is normally disentitled to termination and severance pay. However, if illness is the source of the frustration, then the employee may still be entitled to termination and severance pay. The decision in Estate of Cristian Drimba v Dick Engineering Inc. demonstrates how the courts examine frustration of an employment contract due to the illness of the employee.

The Facts

On May 22, 2013, Mr. Drimba began medical leave from his employment. In June of 2013, Mr. Drimba had been diagnosed with terminal cancer and commenced a leave of absence on June 7, 2013. Dick Engineering Inc. advised Mr. Drimba of an upcoming asset sale to KSH-DEI Solutions Inc. and urged Mr. Drimba to apply for group insurance benefits.

In August of 2013, the Defendant notified RBC Life Insurance that Mr. Drimba was in the process of filing for long term disability benefits and a critical illness claim. In September of 2013, Mr. Drimba passed away while on sick leave.

Dick Engineering Inc., the Defendant, had worked to ensure that a position would be open to Mr. Drimba on his return from sick leave. After the asset sale to KSH-DEI Solutions Inc., an interview remained open to Mr. Drimba. Mr. Drimba had remained an employee of Dick Engineering Inc. for the duration of his sick leave, and the Defendant had generously kept a spot for Mr. Drimba open.
At the time of his death, Mr. Drimba was still employed by Dick Engineering Inc. The Defendant had never terminated Mr. Drimba, nor did they constructively dismiss him.

The Issues
1. Whether the employment contract was frustrated by illness or by death.
2. Whether Mr. Drimba was owed termination and severance pay.

The Decision

On Frustration of Contract

The Plaintiff submitted that the contract of employment had been frustrated by Mr. Drimba’s illness, which ultimately led to his death. When Mr. Drimba had been diagnosed with terminal cancer, it was highly unlikely that he would ever be able to return to work.

The Defendant submitted that the contract of employment was only ended by the death of Mr. Drimba. The Defendant has stated that they retained the full intention to continue to employ him should he return to good health. The Defendant stated that they had even taken steps to ensure that Mr. Drimba had been on disability leave before the sale of assets and worked with KSH-DEI Solutions Inc. to ensure that Mr. Drimba would have an interview waiting for him.

Upon hearing submissions from both sides, Gray J. concluded that the contract of employment had been frustrated sometime between the diagnosis of terminal cancer on June 7, 2013 and the passing of Mr. Drimba on September 17, 2013. Gray J. found that the source of the frustration had been the illness.

On Termination and Severance Pay

As Mr. Drimba’s employment contract was frustrated, he would normally not be entitled to termination or severance pay. Ontario Regulation 288/01 Termination and Severance of Employment provides lists of persons not entitled to termination and severance pay. However, the exception sections do not apply where the source of the frustration is illness or injury of suffered by the employee.

As the court found that it was the terminal cancer that had frustrated the contract, not death, Mr. Drimba was entitled to both termination and severance pay.

Therefore, based on this logic an employee who suffers a sudden onset illness, such as a heart attack while at work, would likely not be eligible to receive any termination or severance pay. However, employees who become sick, take time off, and then pass away from that sickness, would be eligible for pay based on frustration of contract, receiving their minimum statutory notice.

If you are unsure if you are owed notice, or what your obligations are with regard to an employee under the Employment Standards Act, 2000, contact Monkhouse Law today for a free consultation.