What is a Frustrated Employment Contract in the UK?

An employment contract is key to the employment relationship between you and your employees. It contains the job responsibilities of your employee and the rights and obligations for both of you. However, when the relationship between you and your employee needs to end, you or your employee may terminate the employment contract. This may occur because either you or your employee cannot maintain your responsibilities under your contract due to an unforeseen event. This is known as the frustration of an employment contract. However, there are strict conditions and circumstances. This article will explain what is meant by the frustration of an employment contract, what events might constitute frustrating events, and the problems associated with a frustrated employment contract. 

What is a Frustrated Employment Contract?

The frustration of an employment contract is one way of ending the employment contract. It can happen where an event suddenly occurs, preventing you or your employee, or both of you, from maintaining your essential responsibilities detailed in the employment contract. This is because the event means that continuing with the employment contract would be either:

• impossible;
• illegal; or
• make the contract very different from how the parties originally intended.

In this situation, both you and your employee no longer need to carry out your responsibilities under the employment contract. Therefore, neither of you are at fault for not continuing with them.

What Sort of Event Counts as Frustration?

As an employer, you will not be able to outline what you constitute to be a frustrating event in the employment contract. Indeed, this is because it is an event which neither you nor your employee expected to happen.

Various events could mean that continuing with the employment contract would be impossible. For instance, it may cause it to be illegal or may make the contract very different. The most common events are:

• imprisonment;
• an employee’s illness; and 
• death.

You should also note that for the court to consider an employment contract impossible to carry out, it must be very different to how each party intended to carry it out. For example, carrying out the contract would be inconvenient or cause material loss or hardship. 

Imprisonment

Where your employee has a prison sentence, they are physically unable to perform according to the employment contract. Therefore, you will likely consider this to be a frustrating event that terminates the contract. This would begin on the date of the sentence. However, this is not automatically the case as you must consider the individual circumstances.

However, where your employee is in prison due to misconduct regarding their employment, it is unlikely to be frustrating. This is because an event you consider to be misconduct is something that both you and your employee could foresee. 

Illness

Suppose your employee falls ill and you decide that frustration of their employment contract may occur. In that case, you must consider whether their illness will mean that continuing the employment contract would either be:

• impossible; or
• very different from how the parties intended it to be.

When considering this, you should consider the nature of the illness and its duration and must do this before you carry out any dismissal. As part of this, you will need to consider:

• how long it might take you to replace the employee in terms of the significance of the role;
• if the employee had not fallen sick, how long the employment would have lasted;
• how long you employed the employee; and
• the terms of the contract, including any relating to sickness pay.

Death

When your employee dies, their employment contract will be frustrated. Likewise, where an employment contract is between you and your employee, the contract would be frustrated if you die. However, the employment contract between the employee and a corporation is not frustrated when you as an employer dies.

What Are the Problems With Frustration of an Employment Contract?

There are some problems associated with frustration. Therefore, you should not rely on it as an employer. It is also something that does not occur very often.

Tribunals have been known to take time to apply frustration of contract. This is mainly because tribunals want to ensure you are not avoiding your fair dismissal obligations as an employer.

Also, now that employment policies often consist of comprehensive sickness absence policies and employment contracts may contain details about sick pay, the frustration of an employment contract is less relevant than it has been. Finally, the fact that permanent health insurance can be available also affects the relevance of frustration in employment contracts.

Where your employee has a disability, it is still possible for frustration of their employment contract to be relevant. However, this does not take place where you have not made reasonable adjustments for that employee.

Key Takeaways

Whilst frustration of your employees’ employment contracts is unlikely to occur, it is still possible and, therefore, something you as an employer should be aware of. There may be instances where it is relevant, and therefore, you must understand the circumstances. 

If you need help with understanding what a frustrating employment contracts means in the UK, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So, call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions