Warner v Armfield Retail & Leisure Ltd

The doctrine of frustration may apply to a contract of employment, including one terminable on short notice. For a disabled employee, however, the tribunal must first consider whether the employer is in breach of the duty to make reasonable adjustments. Frustration cannot operate while there is a reasonable adjustment which the employer should make to keep the employee in employment. Where no such adjustment exists, the ordinary frustration factors remain relevant, including the nature and likely duration of the incapacity and whether a reasonable employer could be expected to wait longer.

For discrimination arising from disability, dismissal may be justified in principle, but the tribunal must separately consider whether the manner of dismissal constituted unfavourable treatment because of something arising from the disability and, if so, whether it was proportionate.

The claimant, a site manager, suffered a severe stroke and remained unable to perform most of his duties. His employer sent him a P45 and confirmed that his employment had ended. The Employment Tribunal rejected claims of unfair dismissal, breach of contract and disability discrimination.

It held that the contract had been frustrated and that the employer had not breached the duty to make reasonable adjustments. It also accepted that dismissal was a proportionate means of achieving the legitimate aim of regularising the claimant’s employment status. The appeal concerned the application of frustration to employment contracts involving disability and whether the tribunal had adequately considered the manner in which the dismissal was carried out.

1. Frustration. The appeal was dismissed on the unfair dismissal and breach of contract issues. The EAT was bound by Notcutt v Universal Equipment Co (London) Ltd to accept that frustration can apply to contracts of employment, even where the contract is terminable on short notice.
2. Disability legislation affects the application of frustration. Before finding that a disabled employee’s contract has been frustrated, the tribunal must consider whether the employer is in breach of the duty to make reasonable adjustments. If there is something which it is reasonable to expect the employer to do to keep the employee in employment, frustration cannot apply. This principle was supported by Thorold v Martell Press.
3. The tribunal had considered possible adjustments, including alternative administrative work, reallocating duties and providing assistance. It found that none would both achieve the statutory purpose and be reasonable for the employer to make. It therefore applied the correct test and was entitled to conclude that the contract had been frustrated.
4. The tribunal’s treatment of sick pay as not relevant was misstated, since sick pay provisions and their operation are relevant factors. The error did not affect the result because sick pay was discretionary and had ceased. The findings concerning the claimant’s prospects of returning to work were not perverse.
5. Discrimination arising from disability. The appeal was allowed on the issue of the manner of dismissal. The tribunal had not addressed the submission that failing to conduct any capability procedure or enquiry amounted to unfavourable treatment because of something arising from disability. If established, that treatment required justification, and proportionality was not self-evident where the dismissal contravened basic fairness. The issue was remitted to the same tribunal for further submissions and findings, including on causation, unfavourable treatment and justification.
6. The EAT expressed no concluded view on the relationship between frustration and dismissal under the Equality Act 2010 because dismissal had been conceded for that claim and the issue had not been argued.

• Employment Appeal Tribunal: The appeal from the Employment Tribunal’s judgment dated 3 May 2012 was allowed only on the issue of discrimination arising from disability. The remaining grounds were dismissed, and the unresolved issue was remitted to the same tribunal.