Log inStart free
Home / HR glossary / Frustration of contract
HR glossary · Ending employment and discipline

Frustration of contract

Frustration of contract is when an unforeseen event makes the job impossible to perform, so the employment ends without either side being at fault.

Also called: frustrated employment contract, frustration

What frustration of contract means

Frustration is a common-law idea. An employment contract is frustrated when something happens that nobody planned for, that is not either party's fault, and that makes the work impossible or radically different from what both sides signed up for. When that happens, the contract ends automatically. Nobody fires anyone and nobody quits.

Employers sometimes hear about frustration when an employee has been off sick for a long time, or has lost a licence the job requires. It is a real legal concept, but courts apply it rarely and carefully. Treating it as an easy way out of paying notice is a common and expensive mistake.

How it works

Courts ask whether the event was truly unforeseen, whether it was outside both parties' control, and whether it makes the job, as both sides understood it, impossible to perform for the foreseeable future. A short or uncertain absence, or a problem that can be worked around, is not enough.

Illness and disability are the hardest cases. Before anyone can argue that a long absence frustrated the contract, human rights law requires you to accommodate the employee to the point of undue hardship. That means asking for medical information about what the person can do, considering modified duties or a different role, and keeping in touch. Frustration is usually argued, if at all, only where medical evidence shows the employee will not be able to return to work in any reasonable timeframe.

Self-induced events do not frustrate a contract. If an employer closes a location by choice, the employer has ended the employment and owes notice.

Employment standards laws may still require notice or termination pay even when a contract is frustrated, and the rules differ. Get advice before relying on frustration, and document every step of the accommodation process.

Is it the same in every province?

Frustration is a common-law principle that applies the same way in every province and territory outside Quebec, which has its own Civil Code rules. Each province's employment standards law and human rights law apply on top of it, and those can still require notice, termination pay or accommodation.

Example: A long absence at a Charlottetown bakery

Elena runs an 8-person bakery in Charlottetown. A baker has been off for 14 months after a back injury. Elena is tempted to say the job is over. Instead, she writes to the baker asking for updated medical information about any duties he could do, and offers a lighter front-of-house role if that fits.

The reply says he cannot return to any work in the foreseeable future. Elena keeps a record of each step, then gets legal advice on whether the contract is frustrated and what employment standards still require, rather than simply stopping contact.

Disability management in the Staffkin HR Suite

Staffkin HR Suite disability management keeps cases, accommodations and return-to-work plans together, so each step you take is recorded.

Book a demo

Free tools and guides for this

Questions about frustration of contract

Can a long illness frustrate an employment contract?

It can, but rarely. You must first accommodate to the point of undue hardship, and the medical evidence usually needs to show the employee cannot return to work in any reasonable timeframe.

Do I owe notice if the contract is frustrated?

Not at common law, but employment standards laws may still require notice or termination pay in some situations. Check your province before you decide.

Is closing my business frustration of contract?

Not if you chose to close. A voluntary closure is the employer ending the employment, so notice is owed.

Related terms

Duty to accommodateThe duty to accommodate is an employer's duty under human rights law to adjust work for.Undue hardshipUndue hardship is the limit of an employer's duty to accommodate: the point where an.Long-term disability (LTD)Long-term disability is insurance that replaces part of an employee's income when a.Return-to-work planA return-to-work plan is a written plan for bringing an employee back after an illness.Medical notes (sick notes)A medical note is a health provider's statement that an employee is or was unfit to work..Termination notice (statutory notice)Termination notice is the minimum written warning, or pay in lieu, that employment.Disability managementDisability management is how an employer handles illness, injury and disability at work.All HR terms165 plain-language definitions

Official sources

General information for Canadian employers, not legal advice. Rules differ by province and territory and change over time, so check with your provincial employment standards office (or the federal Labour Program if you are federally regulated) before you rely on it. See employment standards by province.

Checked against official sources on 4 November 2026.