Labour & European Law Review Weekly Issue 347 27 November 2013
If it is not possible to fulfill the obligations under a contract because of something unforeseen, the law says it is “frustrated” and can be discharged. In Warner v Armfield Retail & Leisure Ltd, the Employment Appeal Tribunal (EAT) confirmed that, although the doctrine applies to contracts of employment, tribunals first have to be satisfied in cases involving disabled employees that the employer has not breached their duty to make reasonable adjustments.
Mr Warner worked as a site manager for a company refurbishing retail outlets and pubs. It was a stressful job, requiring a high level of mobility. In February 2010 he suffered a stroke that was so severe he was still virtually unable to walk a few months later. Although the company was not obliged to pay sick pay, it did so until May that year. Managers visited him in hospital, brought him to the office on one occasion and then kept in touch on the telephone over the next couple of months.
In September he moved from Berkshire (which was relatively close to the company’s offices), to Christchurch in Dorset, after which he lost contact with his employer. In January 2011 the company wrote to him terminating his contract and enclosing a cheque for accrued holiday pay. It later confirmed that his contract had terminated as a result of "capability on medical grounds". Medical evidence, which was obtained later, confirmed that Mr Warner was highly unlikely to become fully capable of doing his job.
He claimed unfair dismissal, breach of contract and disability discrimination.
The tribunal accepted that the "provision, criterion or practice" for site managers to undertake manual work put Mr Warner at a substantial disadvantage by comparison with a non-disabled person, as he was not fit enough to fulfil the role. However, it concluded that there were no reasonable adjustments that could have been made in the circumstances.
The tribunal also dismissed his claims for unfair dismissal and breach of contract on the basis that his contract had been “frustrated” by January 2011 and there was therefore no dismissal.
Mr Warner appealed, arguing that the doctrine of frustration could not apply when there was a duty on the employer to make reasonable adjustments. In addition, the tribunal had ignored his argument that the employer had treated him unfavourably by failing to carry out any form of capability procedure and dismissing him without finding out how he was.
The EAT first referred to the Court of Appeal decision in Marshall v Harland & Wolff, which considered the doctrine of frustration in the context of incapacity due to sickness. There, the Court said the relevant question was whether, “…the employee’s incapacity….[was] of such a nature or… [appeared] likely to continue for such a period, that further performance of his obligations in the future would be either impossible…or radically different..”.
The EAT also noted the Court of Appeal’s decision in Notcutt v Universal Equipment Co (London) Limited, and reluctantly held that the doctrine of frustration could apply to contracts of employment.
It went on to confirm that before the doctrine can apply, tribunals first have to be satisfied in cases involving disabled employees, that the employer was not in breach of their duty to make reasonable adjustments. If reasonable adjustments can still be made, there cannot be frustration. In this case, the EAT said that because the tribunal had concluded that there were no reasonable adjustments which could have been made, there was no error of law.
However, the tribunal had not properly dealt with the point about unfavourable treatment, so the EAT remitted this part of the appeal to the same tribunal to reconsider.
This case confirms that frustration cannot be argued where there are outstanding reasonable adjustments an employer could make in relation to a disabled employee.
However, perhaps more importantly, it serves as a reminder for union representatives that employers may, when dismissing employees who are on long term sick leave, try to defend an unfair dismissal claim by arguing that the contract had been ‘frustrated’.