Introduction to this document

Frustration of contract letter

Our frustration of contract letter is only for use in limited circumstances usually related to the long-term imprisonment of an employee. Be aware that the courts don’t generally like the concept of frustration being applied to employment contracts.

The doctrine defined

Frustration of contract occurs where the performance of the contract of employment becomes impossible, or substantially different from that which the parties originally contemplated at the time of entering into it, by reason of an unforeseen event which has occurred without the default of either party to the contract. The question of termination of a contract of employment due to frustration most frequently arises in cases of absence of the employee because of either imprisonment or long-term illness. Where the contract is frustrated, there is no dismissal as the essence of frustration is that, in law, termination is automatic. So, there is no claim for either unfair or wrongful dismissal - in the latter case, this means that no notice of termination of employment or pay in lieu of notice is due. However, any payment of wages, sick pay and holiday pay that accrued before the date of the contract’s frustration must be paid to the employee.

Frustrating events

It will be exceptionally rare that you can use the doctrine of frustration in cases of long-term illness. The courts are very reluctant to apply frustration where a procedure already exists for termination of the contract, such as a normal incapacity dismissal procedure. Plus, the employee could be disabled under the Equality Act 2010 so they could still bring a claim for disability discrimination. The main use for the doctrine of frustration is in cases of imprisonment - where the employee receives a significant custodial sentence and so they clearly cannot come to work for the foreseeable future. The doctrine is normally only accepted by the courts where the frustrating event renders all performance of the employment contract clearly impossible - so it cannot be used in cases of criminal convictions that do not result in imprisonment.  Likewise, it will not apply to short custodial sentences where you can potentially follow other dismissal procedures, such as those for “some other substantial reason dismissals. Where it might be useful is for those occasional cases where an employee receives life imprisonment or a custodial sentence of several years or longer. Make sure that, before concluding an employee’s contract has been frustrated, you have carried out a full investigation into all the circumstances. If possible, it is also best to hold a meeting with the employee to discuss the matter, for just in case the termination is held by the employment tribunal to be a dismissal rather than being caused by frustration.


Our Frustration of Contract Letter enables you to insert details of the alleged frustrating event and then goes on to say that, as it means the employee has been unable to perform their duties under the contract and will not be able to return to work for some time, you consider their contract has automatically terminated by reason of frustration. Finally, it confirms the employee will not receive anything in respect of notice.