The Employment Appeal Tribunal in the case of Warner v Armfield Retail & Leisure Ltd [2012] has held that a disabled employee’s contract of employment is capable of being frustrated, but that in such cases, the Employment Tribunal must first consider whether the employer was in breach of its duty to make reasonable adjustments. If reasonable adjustments were possible (and indeed ought to have been made), the doctrine of frustration could not apply and the employer should take reasonable steps to keep the employee in their job role.
Under the doctrine of frustration, if a “frustrating event” (namely one which affects the contract in such a way that it becomes impossible to perform) occurs, the contract is automatically discharged by operation of law and neither party will be deemed to have any further obligations under it. Previous case law has also suggested that there is no need to pinpoint a date when a party believes that frustration has occured; the contract was capable of frustrating “at some point” over a period of time and there is no need for either party to expressly communicate at the time of frustration that they believe the contract no longer to be binding.
Here, the employee had sought to argue that a contract of employment could not be frustrated once the duty to make reasonable adjustments had arisen. This argument was rejected by the Employment Tribunal and subsequently by the Employment Appeal Tribunal. The Judge determined that it would be “unjust and illogical” to exclude frustration of contracts which were impossible to perform as the result of an employee’s illness or disability. He added that there is a degree of additional protection available to employees, and the Tribunal must still consider whether the employer was in breach of the duty to make reasonable adjustments. As the employer in this case had not failed in its obligation to make reasonable adjustments, the contract was found to have frustrated.
In spite of this decision, frustration will undoubtedly remain a rare concept in employment contracts given the wide range of legal protection which is available to employees. Factors which the courts will typically take into account when determining if a contract has been frustrated in long-term ill health absence cases will be the nature of the job role itself, the employee’s length of service, the length and effect of the illness, whether any wages had been paid, whether the employee needed replacing and whether it was reasonable for the employer to wait any longer for the employee to return to work. Employers should therefore not believe in light of this decision that they can seek to rely on frustration as a primary defence, unless all other reasonable avenues have first been exhausted.
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