Does coronavirus frustrate a contract?
Legal principle. Where an employment contract is frustrated, it‘s brought to an end immediately and there‘s no dismissal on the employer’s part. This means that an employee: (1) cannot claim unfair dismissal; and (2) is not entitled to any notice payment or payment in lieu of notice.
Historic approach. Whilst this has advantages for employers, the tribunal is reluctant to find that employment contracts have been frustrated. It’s only occurred in a few cases, e.g. where the employee had been imprisoned. It’s been suggested that the coronavirus outbreak could be a frustrating event, meaning that employers could terminate employment contracts without going through any normal process. Is this true?
Long shot. It’s unlikely the tribunal would conclude that coronavirus is a frustrating event. In order to successfully argue that a contract has been frustrated, the frustrating event must: (1) have been an unforeseeable event at the point the parties entered into the contract; (2) have been outside of the parties’ direct control; and (3) make any further performance of the contract, as it was originally intended to operate, impossible, i.e. the employee can’t return to work at any point. If they will be able to return, frustration is a complete non-starter.
Public policy. In addition the tribunal looks at public policy which demands that employees retain employment rights. As frustration releases an employee from all of their legal obligations, tribunals will be reluctant to entertain frustration arguments, particularly where more than one employee has been affected, e.g. a workplace or premises closes due to coronavirus. This would be a redundancy situation, not a frustration of contract.
Tip. It’s possible that frustration could potentially be argued in a limited number of cases where only one or two employees are affected. Take individual legal advice before going down this route.
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