Can a disabled person’s contract be frustrated?

Mr A Warner v Armfield Retail and Leisure Ltd [UKEAT/0376/12]

A contract is treated as coming to an end by ‘frustration’ if, through no fault of the parties, the contract cannot be performed. In the employment context, if frustration applies, the employee is not ‘dismissed’.

Mr Warner was a site manager for Armfield Retail and Leisure Ltd (‘Armfield’). Armfield specialises in the refurbishment of retail outlets and public houses. In his role Mr Warner needed to be mobile because he had to attend premises being refurbished and manage the process on a day-to-day basis.

On 12 February 2010 Mr Warner suffered a severe stroke. Mr Warner remained in hospital for two months and he was still unable to walk in June 2010. In September 2010 Mr Warner moved from Berkshire (relatively close to Armfield’s offices) to Christchurch in Dorset. After moving Mr Warner and Armfield lost contact. Mr Warner did not return to work and he gave no indication when he might do so.

On 27 January 2011 Armfield sent Mr Warner a cheque for accrued holiday. Its covering letter said ‘we also confirm the end of your contract of employment and enclose your P45.’

Both parties accepted Mr Warner was disabled under the Equality Act. Armfield did not obtain any medical evidence about Mr Warner’s condition while he was employed. However, it did obtain a medical report in October 2011. The report concluded that Mr Warner would not have been able to perform eight out of nine categories of duty when his employment ended in January 2011. He went on to say that it was highly unlikely that Mr Warner would become fully capable.

Mr Warner brought a claim in the employment tribunal for unfair dismissal and disability discrimination.

The employment tribunal held that Mr Warner’s contract of employment had been frustrated and he had not been dismissed. He could not, therefore, have been unfairly dismissed. The employment tribunal also concluded that no reasonable adjustments could be made.

Mr Warner appealed to the EAT.

The EAT agreed with the employment tribunal that frustration can apply to contracts of employment. It also agreed that it can apply when there is a duty on the employer to consider making reasonable adjustment. However, it can only apply if the employer has complied with its duties to make reasonable adjustments or, as in this case, there were no reasonable adjustments that could be made.

In this case, as no reasonable adjustments could be made, Armfield was not in breach of its duty to make adjustments and Mr Warner’s contract was frustrated.

This case confirms that a contract of employment may be frustrated and brought to an end if an employee is on long-term sick leave with no likelihood of returning to work even if the employee is disabled. The EAT, however, commented that the behaviour of Armfield, simply sending the P45, was not good practice. It also went on to say that, although Mr Warner was unsuccessful in his claim, this does not mean that all employees will be unsuccessful.

Relying on frustration is an uncertain way to end the employment relationship. It will inevitably mean that a fair procedure is not followed and this will leave any employer in an exposed position if the employment tribunal does not agree the contract has been frustrated.

In practice employers should follow a fair procedure. This will put the employer in the strongest position to defend any claim of disability discrimination or unfair dismissal but still leave open the argument that the contract was frustrated.

If you have an employee who is disabled or has been absent for some time unwell and you are unsure what to do please give us a call and we can guide through the steps to take.