1 April 2020
Covid 19 Employment Law Series: Frustration – (Largely) unprecedented measures for unprecedented times?
Introduction A contract may come to an end by operation of the doctrine of frustration when an unforeseen event makes performance impossible or radically different to what the parties originally intended. The doctrine applies to employment contracts as it does to other types of contract. However, it is an issue rarely encountered by employment lawyers. Tribunals are generally reluctant to find that an employment contract has been frustrated, largely because the doctrine allows employers to sidestep statutory protections afforded to employees. However, unprecedented times call for unprecedented measures, and frustration may become a useful tool in certain employers’ fight against the disruption caused by the Covid 19 pandemic. The doctrine of frustration in employment law To succeed in an argument that the employment contract has been frustrated, the employer needs to prove two matters (the test is objective):
- There has been an unforeseen event which fell outside of the contemplation of the parties when they entered the contract.
- This has made performance of the contract impossible or radically different to what the parties originally intended.
- Cannot claim unfair dismissal.
- Is not entitled to any notice or payment in lieu.
- Would not be entitled to benefit from the provisions of the newly incepted Coronavirus Job Retention Scheme as a “furloughed” worker.
- Employee illness.
- Employee imprisonment.
- Employee or individual employer’s death.
- The length of the previous employment.
- How long it had been expected that the employment would continue.
- The nature of the job.
- The nature, length and effect of the illness or disabling event.
- The need of the employer for the work to be done, and the need for a replacement to do it.
- The risk to the employer of acquiring obligations in respect of redundancy payments or compensation for unfair dismissal to the replacement employee.
- Whether wages have continued to be paid.
- The acts and the statements of the employer in relation to the employment, including the dismissal of, or failure to dismiss, the employee
- Whether in all the circumstances a reasonable employer could be expected to wait any longer.
- When had it become commercially necessary for the employer to decide whether or not to employ a replacement?
- At the time when the decision had to be taken, what would a reasonable employer have considered to be the likely length of the employee's absence over the next few months?
- If in the light of his likely absence it appeared necessary to engage a replacement, was it reasonable to engage a permanent replacement rather than a temporary one?