The legal concept of frustration is something all would-be lawyers are taught when learning about contract law. The idea is that a contract can be set aside where an unforeseen event makes it impossible for one or both parties to fulfil the contract. The principle comes from the case of Taylor v Caldwell in 1863, where a contract for hire of a hall was frustrated because the hall had burned down. Obviously that was long before we had any statutory employment law in the UK – so does frustration have any relevance to employment law today?
Well, frustration is something that most employment lawyers don’t come across very often – at least not in the legal sense! One of the reasons for this is because if a contract terminates by frustration then it is neither a resignation nor a dismissal, and therefore the employee would not be entitled to notice, and would not have the ability to bring an unfair dismissal claim. While that may seem attractive to some employers, the Tribunals have understandably been reluctant to consider employment contracts as having been frustrated, as it potentially deprives an employee of the opportunity to challenge the termination of their employment.
There are however some cases where frustration has been successfully argued by the employer, such as where the employee is sent to prison, where the employee is excluded from their place of work by a third party, or where the employee is ill. These are fairly rare examples, and it is worth pointing out that all of these reasons may be potentially fair reasons for dismissing an employee in any event. As an argument of frustration is never guaranteed to succeed, it is always prudent for an employer to have a fair reason and follow a fair procedure so as to be able to defend an unfair dismissal claim (provided the employee qualifies to bring an unfair dismissal claim of course).
The recent case of Warner v Armfield (2013) showed that frustration can still apply, even where the employee is disabled and therefore the duty to make reasonable adjustments applies.
In the case, Mr Warner had suffered a severe stroke and was therefore absent from work. After nearly a year, Armfield wrote to him to confirm the termination of his employment, enclosing his P45 and a cheque for the holiday pay owing to him.
Mr Warner brought claims for unfair dismissal, breach of contract and disability discrimination. He argued that he had been dismissed. Very unusually, Armfield argued that in relation to the unfair dismissal and breach of contract claims, the contract of employment had been frustrated, but that in relation to the disability discrimination claim, they accepted that he had been dismissed. The Tribunal accepted the frustration argument in relation to the unfair dismissal and breach of contract, but found that in relation to the disability discrimination claim there had been a failure on Armfield’s part to make reasonable adjustments.
Mr Warner appealed to the Employment Appeal Tribunal (EAT), arguing that frustration should not apply and that it could not apply where there was a duty to make reasonable adjustments.
The EAT said that while they accepted that frustration could apply to employment contracts in some circumstances, employers and employees would normally be expected to deal with issues of disability, sickness and other absence within the employment relationship (i.e. subject to the normal position of resignation and dismissal). However, they said that frustration was something that could apply to a disabled person, provided that as an additional factor the employer had to bear in mind the duty to make reasonable adjustments. In this case, Armfield were found not to have breached the duty to make reasonable adjustments.
However, the EAT sent the case back to the Tribunal for further questions to be looked at, particularly the lack of procedure before the termination of Mr Warner’s employment and whether this in itself was unfavourable treatment based on Mr Warner’s disability.
The Warner case shows that frustration can sometimes be successfully argued, but that an employer’s conduct in the lead up to the termination of employment can still be the subject of a claim. The decision on whether to argue frustration is one that employers should only take with the benefit of legal advice.
If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).