Not always, said the tribunal in Carter vs Aulds Bakeries ltd, finding that Carter was unfairly dismissed after his employment was terminated on the grounds of frustration when he was sent to prison for six months.
Frustration of contract refers to an event where the employer terminates the employment contract on the basis that the employee is no longer able to honour his side of it, and being in prison would potentially be one reason. For ‘frustration of contract’ to work it must be shown that the event preventing the employee from working (a) was not reasonably foreseeable; (b) was not under the direct control of either party; and (c) makes any further performance of the contract, as it was originally intended to operate, impossible. Only where these three factors exist can the contract be lawfully terminated. Examples of frustration would include:
· In the event of an employee’s death
· A legal change that makes the parties’ original contact illegal (which is rare)
· Imprisonment that is long term in relation to the employee’s length of service.
In this case Mr Carter had worked for Aulds Bakery since 2005 and he was sentenced to 6 months in prison in September 2013. In early November 2013 he was released having served 2 months (one third of his sentence). On 13 November he received a letter terminating his employment on the grounds that he had ‘frustrated’ his contact.
The employer made 2 mistakes. Firstly they had not followed any dismissal procedure at all and had just sent out the dismissal letter, making the dismissal process procedurally unfair. Secondly, their ground for termination, frustration, could not be relied on in this case. At the point they sent the termination letter Mr Carter had been released, and was able to return to work.
This ruling does not mean that you cannot necessarily dismiss an employee who is sent to prison for a short term, but a proper procedure must be followed and the doctrine of frustration must be used with great care.
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