The Persistent Myth of the "2-Year" Rule in Disability Cases
Updated: May 8
There is a persistent myth that after two years of incapacity or absence due to disability or illness, an employer is entitled to end the employment relationship on the basis of claiming frustration of contract. But does the myth hold any water? We will find out in this post.
The Origins of the Myth
What might be the source of the so-called “2-Year Rule”?
One place to look is the Workplace Safety and Insurance Act (WSIA). Section 41 creates a statutory requirement on an employer to re-employ an injured worker who can perform the essential duties of their job until the earliest of two years from the date of injury – as one measure in the section.
This would suggest that after two years, as one measure, the employer no longer has an obligation to re-employ an injured worker. This may be one source for the so-called 2 Year Rule.
2. LTD Policies
Another possible source is the typical distinction between “own occupation” and “any
occupation” commonly found in long-term disability (LTD) contracts or LTD insurance policies. These policies typically provide income replacement for an employee who is totally disabled and unable to perform the essential duties of their “own occupation” for two years from the date of disability. Thereafter – known as the “change of definition date” – an employee must show that they continue to be totally disabled and unable to perform the duties of “any occupation” for which they are qualified.
The two-year mark, then, is an important threshold in LTD benefit policies and may give rise to an employer’s belief that if an employee continues to be totally disabled and in receipt of LTD benefits beyond the change of definition date, the contract of employment has become frustrated.
Is the "2-Year" Rule Myth or Fact?
The "2-Year" Rule is nothing but a Fable. there is no such legal basis for this assertion. There is no statutory provision for a fixed time limit to absence, and the Courts take a much more nuanced approach to deciding whether frustration has occurred on the particular facts of each case.
Each case is assessed on its particular facts taking into account the modern approach. If you want to know more about the modern approach the Court adopts to handle disability cases, this article below might be for you:
Some Recent Cases
Nason v Thunder Bay Orthopaedic Inc., 2015 ONSC 8097
The plaintiff was a 45-year old Registered Orthotic Technician employed for approximately 20 years before he was terminated purportedly for frustration of contract. In August 2010, the employer said it could no longer accommodate the employee and put him on a leave of absence. In June 2012, the plaintiff sought a return to work, but was ultimately terminated in January 2013.
The Court held, in paragraph 180, that the plaintiff had been terminated and that the employer had not established frustration of contract due to the plaintiff’s disability. Specifically, the employer failed to show that there was no reasonable likelihood of the plaintiff being able to return to work within a reasonable timeframe around the time of termination.
Boucher v Black & McDonald Ltd., 2016 ONSC 7220 (Div Ct)
The plaintiff was a 46-year-old employee who went on long-term disability benefits in October 2011 and later advised the employer that she could return to work
by the end of 2013. The insurer agreed she was no longer disabled and they proposed a graduated return to work by November 11, 2013. However, on October 31, 2013, the employer terminated her employment due to “absence of several months.”
The Small Claims Court denied the employer’s frustration argument, employer appealed. The Divisional court agreed with the Small Claims Court decision and held, in paragraph 36, that:
In the present case, there was a plan to return to work. Indeed, BML had been advised by October 13, 2013 that Boucher intended to return to work November 11, 2013. However, following the submission of the return to work plan, Boucher was terminated.
Milloy v Complex Services Inc., 2017 ONSC 2923
The plaintiff had worked for more than 10 years with the defendant primarily as a table games dealer for a casino. There was no dispute in the case that the plaintiff developed a permanent disability to her right shoulder as a result of a repetitive work-related injury and could no longer work as a table games dealer.
The plaintiff applied for numerous alternate positions within the company, but was not hired for any despite being qualified. The defendant employer ultimately ended the relationship citing frustration of contract after approximately 2 years after the injury.
The Court found that although the plaintiff had an undisputed permanent injury to her shoulder and could not work as a table games dealer, there were many other positions within the company that she applied for and was qualified to work. The employer failed to give any convincing reason as to why the plaintiff was not hired for any of the numerous other jobs she applied for.
There is no such legal basis for the "2-Year" Rule. There is no statutory provision for a fixed time limit to absence. Each case is assessed on its particular facts taking into account the modern approach.
If you involved in a disability scenario as an employer or an employee, you are well advised to consult an an employment lawyer consultation as soon as possible to preserve your employment law legal entitlements.