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Thursday, May 24, 2007
The Law at work
Q: I own and run a franchise business. We have 16 employees, one of whom has been absent from work for the last four years, due to an injury she suffered in a road traffic accident.
She tells me that she does not know when she will be fit to work again. While I did pay her for a few weeks after the accident, she has not received any money from me for a number of years now. I filled this lady’s job on a temporary basis initially, but last year I had to make the replacement permanent or lose her.
I have considered dismissing the employee who is absent, but I understand that she could sue me for discriminating against her because of her disability. Am I stuck with her on my books forever?
A: No. It may well be that this lady’s employment has already been brought to an end automatically by virtue of the application of the legal principle of frustration.
In simple terms, the doctrine of frustration has the effect of discharging any contract (including an employment contract) if, after its formation, events occur making its performance impossible or illegal. In this instance, the employee’s contract to work for you is impossible to perform through no fault of either party.
A leading legal textbook explains that frustration “terminates a contract automatically at the time of the frustrating event. The court may therefore hold that the contract was frustrated even though the parties for some time after the event went on behaving as if the contract still existed.”
In an employment context, this effectively means that the contract is terminated by the operation of law rather than on the basis of the any decision, action or conduct on your part.
There is no “dismissal” and you can not, therefore, have unfairly dismissed her or have discriminated against her on the basis of her disability. However, it should be clear to both parties that there is no prospect of her returning to work in the short or medium terms. If there is, then you may have to obtain medical advice as to how long she is likely to remain absent from work. That may not be a bad idea in any case.
There are many examples of this type of case having arisen before courts and tribunals in Ireland and elsewhere. In Aylward v Lawter Products BV, for example, the claimant had been injured as a result of an accident at work. He remained absent from work due to his injuries for a period of three years, during which time he settled a personal injuries claim against the employer. After receiving his P45 from the company he sued for unfair dismissal.
In finding for the company, the Employment Appeals Tribunal determined that “the relationship of employer and employee had ceased to exist between the respondent and the claimant by operation of the doctrine of frustration”.
The claimant’s case was dismissed. Despite the decision in the Aylward case, considerable care should be taken by employers to ensure that they do not rely on the doctrine of frustration in anything other than extreme situations. If a court or tribunal does not accept that a contract has been frustrated, you may well be exposed to a claim for unfair dismissal or unlawful discrimination.
One of the key principles underpinning the doctrine of frustration is that contracts will not be frustrated where the critical development has been foreseen by the parties and provided for in the contract. So, for example, contracts of employment that provide for enduring sick pay without limitation or for insurance to provide income continuance payment in cases involving long-term absences are far less likely to be frustrated. Indeed, there are a number of cases which suggest that it is particularly difficult to lawfully terminate contracts of employment by reason of long-term absence where the relevant employees are benefiting from income continuance payments. This will not present a problem in your case.
Finally, I should add some points of warning:
• It is rarely wise to terminate contracts of employment for reasons relating to medical issues without first obtaining a sound, detailed medical report;
• The interaction between the doctrine of frustration and the Employment Equality Acts has yet to be explored in any detail by the Equality Tribunal; and
• Given the complexity of many of these cases, specific legal advice should always be sought before sending out P45s !
Adrian Twomey practises in the area of employment law at Doyles Solicitors of Wexford and New Ross. In his regular column he answers your questions about the law as it applies to you and your work. Adrian can be contacted on 053-9123077. This week’s question relates to long-term absentees.
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