Frustration of Contract Alberta: Employee Rights Explained

What Is Frustration of Contract in Alberta?

In Alberta, frustration of contract occurs when an unforeseen event makes it impossible for an employee or employer to continue the employment relationship.

It’s not the same as being fired or laid off — it’s when the employment contract automatically ends because neither party can fulfill their obligations any longer.

Typical examples include:

• A serious illness or injury that permanently prevents you from working
• A catastrophic event (like a fire or flood) that destroys the workplace
• Loss of a required license or permit, making your job illegal to perform

Under Alberta law, the concept of frustration is not directly defined in the Employment Standards Code, but courts recognize it through common law. That means it’s interpreted based on past legal decisions — and it’s a high bar to meet.

When Does Frustration Apply to Employment in Alberta?

Frustration only applies in limited situations where:

1. The event is outside both parties’ control.
   It can’t result from negligence or poor management by the employer.
2. The change is permanent or indefinite.
   Temporary illness, injury, or workplace disruption isn’t enough.
3. The job can’t reasonably continue.
   If accommodation, modified duties, or reassignment are possible, the contract is not frustrated.

Because the law in Alberta depends heavily on court interpretation, employers often get this wrong — particularly when dealing with disability or medical leaves.

Frustration of Contract and Disability or Medical Leave

Employers in Alberta sometimes claim frustration when an employee has been on long term disability in Alberta (LTD) or medical leave for an extended period. But frustration doesn’t automatically apply just because you’ve been away.

Before frustration can be declared, the employer must consider:

• Medical evidence showing whether you can ever return to work
• Accommodation options (modified duties, flexible schedules, remote work)
• Communication with you about your recovery or return plans

If your doctor believes recovery is possible, or if accommodation could have allowed you to return, the contract likely wasn’t frustrated — and ending your job could amount to wrongful dismissal in Alberta.

Does Frustration of Contract Affect Severance Pay in Alberta?

If your contract is truly frustrated under Alberta law:

• The employer may not owe common-law severance, since the employment ends through no fault of either party.
• However, if frustration is misapplied or declared prematurely, you may be owed termination pay or full severance, depending on your employment contract and circumstances.

Courts in Alberta have ruled that employees can still receive significant compensation when employers rely on frustration incorrectly — especially in cases involving medical leave or disability benefits.

Frustration of Contract vs. Termination Without Cause

It’s important to distinguish these two concepts:

If your employer uses the word “frustrated” but the real reason is cost-cutting or convenience, it’s not frustration — it’s a termination without cause in Alberta, and you likely deserve full severance pay (up to 24 months).

Examples of Frustration of Contract in Alberta

✅ Likely Frustration:

• Permanent disability that makes it impossible to perform any work
• Revocation of a required license or visa
• Destruction of the workplace with no viable alternative

❌ Not Frustration:

• Ongoing LTD or recovery with potential improvement
• Employer unwilling to explore modified work
• Layoff due to budget or staffing changes

What To Do If Your Employer Claims “Frustration”

1. Ask for details in writing.
   Request the employer’s reasoning and any medical information they relied on.
2. Review your LTD or medical leave documents.
   If your doctor expects improvement, frustration may not apply.
3. Don’t rush to sign severance paperwork.
   Employers sometimes cite frustration to reduce payouts.
4. Speak with an employment lawyer.
   A lawyer can determine if frustration was applied properly — or if your termination was wrongful.

Talk to an Alberta Employment Lawyer About Frustration of Contract

If your employer ended your job and called it “frustration of contract,” it may not hold up under Alberta law.

Our Calgary employment lawyers at Samfiru Tumarkin LLP can review your situation and help you pursue the severance pay you’re legally entitled to.

Our team has:

• 👥 Successfully represented 50,000+ Canadians
• 💰 Secured millions in severance payouts
• ⚖️ Settled over 99% of cases out of court
• 📱 Free Termination Consultations — in some, but not all, cases
• ⭐ Earned 3,000+ 5-star Google reviews
• 🏆 Named on of Canada’s Best Law Firms

Call 1-855-821-5900 or request a consultation online.