Frustration and abandonment of employment are two quite different common law concepts. What they have in common is that they are unlikely to be a regular occurrence at your university. But when they do crop up, the way in which the university handles the situation is essential in ensuring the matter stays out of court.
When will an employment contract be frustrated?
Frustration of an employment contract occurs when an unforeseen and unexpected event prevents the performance of the contract because the situation is fundamentally different from when the parties entered into it.
For frustration to occur, neither party can be at fault for having caused the so-called frustrating event. The result is that the contract is terminated as a matter of law – not at the initiative of either party.
If an employment contract has been frustrated at law the employee will not be able to make an unfair dismissal claim. Importantly, there is also no requirement to follow processes for termination of employment pursuant to an enterprise agreement or policy.
What is a frustrating event in an employment context?
The unexpected or unforeseen event must be so significant that the parties cannot fulfil a contracted promise. The courts are generally reluctant to hold that an employment contract has been frustrated, but have found that particular situations may be considered as frustrating events: death, war, imprisonment, statutory changes (eg, working with children restrictions).
Frustration is most likely to be relevant to a University where one of its staff members is in custody or has been sentenced to a period of imprisonment.
This scenario has not been widely considered in Australian courts. In the English case of F C Shepherd & Co Ltd v Jerrom  1 QB 301 (which has been applied in some Australian decisions), the Court deemed a contract to be frustrated because an apprentice plumber was incarcerated for a period of six months.
In that case, a key factor in the frustration was that the imprisonment caused the apprentice to be absent during the bulk of the training and qualification period for the apprenticeship. The contract was frustrated because the period of imprisonment meant the employer was not able to assess the employee’s suitability to complete the apprenticeship. This had the effect of frustrating the performance of the contract and terminating the employment relationship at law.
What should the University do in response to a frustrating event?
We recommend getting legal advice in these complex circumstances – not all situations will cause the employment contract to be frustrated. For example, in an imprisonment situation there is always a complex question of whether a contract is frustrated when an employee has a right to appeal a decision incarcerating them or to apply for bail.
Frustration cases often turn on the employer’s behaviour. Australian courts have ruled in favour of employees where there was arguably a frustrating event, but the employer acted in a manner which indicated it considered the contract was still on foot (eg, suspending the employee with or without pay).
If your university considers an employment contract has been frustrated, it should communicate its position that the employment has terminated as soon as possible after the frustrating event. The staff member should not be paid or allowed access to University IT systems beyond the date of the frustrating event. Otherwise it is likely the Court will view the University as having continued the employment relationship.
When has an employee abandoned their employment?
Abandonment occurs when an employee unequivocally refuses to attend or return to work, with the result that neither party is able to perform their contractual duties. Some contracts, modern awards and enterprise agreements specifically include provisions on dealing with abandonment (the general staff and academic staff higher education industry modern awards do not provide for it).
An employee who abandons their employment has repudiated their employment contract by demonstrating an unwillingness or inability to render substantial performance. A court will consider all of the surrounding circumstances in determining whether there has been a repudiation. The contract is then either: a) brought to an end by the employer accepting the employee’s repudiation; or b) continued by the employer electing to continue performance of the contract.
In an abandonment situation the staff member has ended the employment at their own initiative. There can be no unfair dismissal remedy and there is no requirement to follow processes for termination of employment pursuant to an enterprise agreement or policy – unless there are specific provisions about abandonment that need to be met.
What should the university do if a staff member appears to have abandoned their employment?
If the university considers that a staff member may have abandoned their employment, all efforts should be made to contact the employee, including sending letters, emails and phone calls. The length of the absence from the workplace before considering abandonment should be substantial (generally at least two months – although it will depend on the circumstances). Relevant checks should be made internally to ensure the staff member has not made contact with any of their colleagues in relation to their intention to return to work.
Ideally, the university will be able to get in contact with the staff member and the staff member will make an unequivocal statement that they will not be returning to work.
Once the university has decided that abandonment has occurred, it must accept the staff member’s repudiation in order to bring the employment contract to an end. If the university does not communicate that it accepts the repudiation and continues to act as if the employment relationship is on foot, it will be held to have elected to continue performance of the contract.
In some circumstances it will be difficult to nominate a date that the repudiation occurred, but this will be necessary in order to calculate the date of termination of employment (and when accrued entitlements should be paid to, for example). If an unequivocal statement is made by the staff member then this can be recognised as the date of repudiation. Otherwise, the university can nominate the date when it considered abandonment was established.
This article first appeared on the Minter Ellison website and has been reproduced with permission.