It is possible in some circumstances with long term sickness to adopt the doctrine of frustration and say that the contract has been frustrated, thus bringing the employment contract to end without dismissing the employee in unfair dismissal terms. This is something I have done in practice on a few occasions for employers but it is something that can only really be used in the more extreme cases of long term sickness where the employee has been off a long time and is unlikely to return.
This does however throw up an additional consideration and that is the issues around disability. By the mere fact that you are exploring frustration of contract as an option, the employee has been off a long time and thus is likely to trigger the 12 month or more time requirement for disability either as having had the condition that long or by you believing that they will not return that they will have it for that long. A recent EAT case of Warner v Armfield Retail and Leisure , is not only a useful reminder of the law of frustration and the factors the Tribunal should take into account to decide whether the contract is indeed frustrated, but deals nicely with the interplay between disability and frustration.
In the case of a disabled person before the doctrine of frustration can apply there is an additional question the Tribunal must determine. This is whether the employer was in breach of a duty to make reasonable adjustments? If there is something which is reasonable to expect the employer to do to keep the employee in employment then the doctrine of frustration cannot apply.