Frustration of contract

There will be no dismissal if the contract of employment is “frustrated”. This is where an unexpected event takes place through no fault of either party, so serious that the contract can no longer continue. When a contract is frustrated, it comes to an end automatically. The employee no longer has any rights under it and cannot claim unfair dismissal.

Although it is theoretically possible for an employment contract to be frustrated by illness, in reality tribunals rarely apply the doctrine of frustration to ill health dismissals because it robs employees of their chance to challenge the fairness of the outcome. If an employee is disabled, a contract can only be “frustrated” once all reasonable adjustments have been made under section 20 Equality Act 2010 (see page 29).

The main factors a tribunal is likely to consider when deciding whether an employment contract has been frustrated by ill health are:

• length of employment to date;

• how long the employment had been expected to last;

• the type of job;

• the illness or injury;

• the need for the work to be done by somebody;

• whether wages/sick pay are being paid;

• any promises the employer made about continuing the employment;

• whether a reasonable employer would wait any longer; and

• in the case of disability, whether all reasonable adjustments have been made.

Mr Warner was a site manager working for a small business with only four employees. The role was fast, physically active and stressful, requiring a high level of mobility. He suffered a debilitating stroke and even after months of recuperation he was nowhere near able to return to his job, whatever adjustments were made. Although the employer was initially supportive, after a few months Warner moved away and the two sides lost touch. Eventually, the HR manager wrote to him with a cheque for holiday pay, confirming the end of the employment and enclosing a P45.

The EAT said the employer’s behaviour was “neither good nor even common practice” after a long period of absence. Even so, the doctrine of frustration could, in rare circumstances, apply to the employment relationship. However, where a worker is disabled, the employer must first consider whether there are any reasonable adjustments to get them back to work. In this example, nothing more could have been done to enable Warner to return to work, so the doctrine of frustration applied, bringing the contract to an end (Warner v Armfield Retail & Leisure Limited [2013] UKEAT/0376/12/SM).