Termination OF THE Employment Contract PDF

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Katy McFarlane lecturer...

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TERMINATION OF THE EMPLOYMENT CONTRACT

There are several ways in which a contract can be brought to an end or terminated by the operation of the law: (a) Frustration The frustration of a contract of employment occurs when without the default of either party it has become impossible for the contract to be performed due to a change in circumstances. Conditions for frustration:   

frustration can only occur after the contract has been formed neither party to the contract is at fault the event that has occurred renders further performance of the contract to be impossible, illegal or changes radically the outcome envisaged by the parties at the time the contract was formed. It can't be easily foreseen.

(i) Long-term Illness leading to frustration of an employment contract. *Marshall v Harland and Wolff [1972] ICR 101 M was a shipyard worker absent due to illness. M dismissed as a result (old case). No wages had been paid during his illness (in line with the contract). The shipyard closed down and M sought redundancy payment. H & W claimed that the contract had been frustrated due to M’s illness. As a result not entitled to any redundancy payment. Held: No frustration. M was entitled to a redundancy payment. Sir John Donaldson stressed that the real question to be asked was: “Was the employee's incapacity, looked at before the purported dismissal, of such a nature, or did it appear likely to continue for such a period, that further performance of his obligations in the future would either be impossible or would be a thing radically different from that undertaken by him and agreed to be accepted by the employer under the agreed terms of his employment?” In considering the answer to this question, the tribunal should take account of:

(Sir J D gives range of different matters that he thinks should be taken into account when deciding whether or not a contract has come to an end due to frustration due to ill health) (a) The terms of the contract, including the provisions as to sickness pay o Sir J D says "The whole basis of weekly employment may be destroyed more quickly than that of monthly employment, and that of annual employment. When a contract provides for sick pay - contract cannot be frustrated so long as the employee returns to work/appears likely to return during the period such sick pay is payable. If right to sick pay expires, and still no return/expected return then it might be so that contract is frustrated, if return to work is impossible/radically different regarding obligations at work. (b) How long the employment was likely to last in the absence of sickness o …"the relationship is less likely to survive if the employment was temporary in its nature than if it was expected to be long term/life long." (c) The nature of the employment o "where the employee is one of many in same category relationship more likely to survive than if employee has a key post which needs filled if absence is prolonged." (d) The nature of the illness or injury and how long it has already continued and the prospects of recovery o "The greater the degree of incapacity the longer the period over which it has persisted the more likely it is that the relationship has been destroyed." (e) The period of past employment o "a relationship which is of longstanding is not as easily destroyed than a short one - this is good law."

"these factors are inter-related" Egg Stores (Stamford Hill) v Leibovici

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Employee (L) in a car accident and his employers continued to pay his wages and another employee carried out his work When he attempted to return to work he was told his job had been filled He brought a claim for unfair dismissal/redundancy payment ES argued that contract had been frustrated. It was held that even if there had been frustration - ES failed to inform E of this before he could return to work. E won this claim. ES appealed. Court said appeal should be upheld and it was reconsidered: relevant question was whether the employer had came to a reasonable time where the job couldn't be kept for the employee? Is there a reasonable length of time before contract can come to an end as a result of long term illness.

Outcome: no straightforward rule. Depends on facts and circumstances of each case. Frustration can occur from long term illness in some cases, and in other cases it does not. (ii) Imprisonment Can imprisonment of the employee constitute frustration of the contract? Difficult area because doctrine of frustration states there must be no fault on either side/ must be unforeseeable. Where party has been sent to prison, aren't they at fault? *F C Shepherd & Co Ltd v Jerrom  J was apprentice at FCS. Imprisoned for an indeterminate time that was between 6 months and 2 years. J released after 6 months. FCS refused to take him back. J claimed unfair dismissal. ET said yes, unfair dismissal. FSC appealed: Ct of App said not unfair dismissal, but frustration due to imprisonment. Mustill, LJ stated: “the likely interruption was sufficient to discharge the employers from any further obligation, from the moment when the sentence of Borstal training was imposed.” For doctrine to be applied - no one can be at fault. Arguably Jerrom was. How did they get around this?

This argument came from the fact that the judge is the one who imposed the imprisonment and therefore the judge is responsible for preventing the work to continue. However, the judge isn't a party to the contract. F C Shephard and Co v Jerrom are a technically neither are at fault. It was argued that Jerrom could potentially claim compensation and upon being released from prison he filed for unfair dismissal. This is controversial. Harrington v Kent County Council  H was a teacher and was imprisoned for 12 months and his contract was automatically frustrated on account to him going to prison.  H appealed his conviction and succeeded in doing so.  He then decided to bring a case against KCC to say that the contract could not be frustrated as he was no longer going to prison.  He lost and the reason was that KCC was entitled to treat the contract as having been terminated through frustration at the time that they did and as they had did so prior to the appeal. It was already frustrated. Consequences of Frustration When a contract of employment is frustrated then both parties are excused from any further performance from that point.

(b) Termination by Agreement Where a contract of employment is terminated by agreement this is when both parties mutually agree that it is coming to an end. When this happens there can be no question of dismissal as no one is being dismissed, it is being agreed that the employment will come to an end. The question that often arises where a contract c;/.rromes to an end through the supposed mutual agreement of the parties, can sometimes be questioned. Igbo v Johnson Matthey I was granted extended leave to visit six family in Nigeria.

She was granted this by her employer but in return, JM got her to sign a document that stated she would resume her shift immediately on a certain day when she returned home. The document that she signed also stated that, “If you fail to do this your contract of employment will automatically terminate on that date.” Did not return due to sickness. Employer claimed that contract had terminated by mutual agreement. In this case it was argued that she was FORCED to agree to these terms. This agreement was clearly brought about by the employer and not mutually agreed to.

Compare to: Birch and Another v University of Liverpool Number of individuals volunteered to retire in this case under a scheme. B and A subsequently claimed a redundancy payment and the employers UoL argued that they had not been dismissed but their employment had ended under a mutual agreement through the premature retirement scheme. It was held termination had been consensual. Where contract has been terminated by genuine mutual agreement then it is not open for the employee to come back for a claim of wrongful dismissal.

(c) Threats/Ultimatums Can employer give ultimatum that employee can either follow lawful orders or resign? Pepper v Web case. Where this happens If order is unlawful?: may amount to a constructive dismissal meaning the employee would have no choice but to resign. Employer would be in breach here. (d) Automatic Termination

Termination of the contract can occur automatically when an event happens, or doesn’t happen. Brown v Knowsley Temporary lecturer was employed - she understood she would only be employed while the post was funded by a commission. Post came to an end because funding came to an end. She challenged this and was going to bring a claim for dismissal Held in these days that there was no dismissal. On the terms of the contract, the contract would automatically terminate when funding ended. Nowadays termination would be considered a dismissal under the employment rights act....