Frustration of Employment Contracts During Pandemic
In Verigen v Ensemble Travel Ltd., the Court considered whether an employer could rely on the COVID-19 pandemic as justification for terminating an employee based on the doctrine of "frustration".
The Plaintiff in Verigen worked in the travel industry. Her employment was terminated by her employer shortly after the start of the COVID-19 pandemic. Her employer argued that the employment contract was frustrated - in other words, that the performance of the Plaintiff's employment activities were rendered impossible by the pandemic.
The Court rejected the employees arguments. It found that while much of the demand driving the business had been depleted, not all of the business had been depleted and it was not going to be permanent. Additionally, the employer had preserved several other employment positions and a recently-opened vacancy had been filled. The Court found that the termination was with a view of simply cutting operating costs to help weather the pandemic.
The Plaintiff, who had commenced her employment in 2019, was awarded damages reflecting a five-month notice period.
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