Termination of Employment

First published on Monday, Mar 28, 2022

Last updated on Tuesday, Jun 25, 2024

As with all things, eventually one of your employees' time with your business will come to an end. There are different types of termination of employment contracts, with varying processes and employee rights.

As an employer, you must be knowledgeable about the distinct types of termination to ensure you are acting lawfully in each one.

What is the Termination of Employment?

This is where an employee’s contract is brought to an end. You can do this in several ways, including resignation, dismissal, or redundancy.

The government set the rights on termination of employment out in part IX of the Employment Rights Act. This ensures an employer is lawful when terminating a contract.

For example, you can make an employee redundant, which means you no longer require their services—or there isn’t enough work to justify their role. You may also dismiss an employee due to gross misconduct or behavioural issue.

You can separate the types of termination into two categories:

  • Voluntary: Retirement, resignation etc.
  • Involuntary termination: Dismissed, made redundant etc.

Dismissal vs Termination of Employment

Dismissal is a type of termination of employment, so not all terminations have to be a dismissal. There are different types of dismissal, such as being ‘laid off’ or ‘fired.’

A termination is any kind of ending to a contract of employment, voluntary or otherwise. Dismissal is always a termination. But it’s not the same the other way around.

The method of termination will determine whether the employee may wish to start a tribunal claim or not. For example, a voluntary retirement is less likely to be challenged by the employee.

However, with dismissals, there can be some hurdles and potential illegal termination of employment claims.

Does an Employer Have to Give Written Notice of Termination of Employment?

There are no statutory requirements as to the form of the notice of termination, only that you give it and communicate it to the employee.

The contract will usually outline the process and if this is the case, it must be followed to be a fair process.

The minimum period of notice for terminating employment can vary depending on the staff member.

Their contract will outline the minimum period for termination. It usually is at least a week’s notice, but this will increase with the employee’s length of service.

How Much Notice Do You Have to Give?

If you dismiss someone without giving full notice, you could be guilty of wrongful dismissal.

The law states that an employee is entitled to at least a week's notice if they have worked for you for between one month and two years.

After two years, an employee is entitled to one week's further notice for every year of service for up to 12 years' service.

So, for six years' service, they are entitled to six weeks' statutory notice and for 20 years' service, they would be entitled to 12 weeks' statutory notice.

These are statutory minimum notice periods, there are often different time frames in contracts.

A month is a common notice period. If the contract explicitly states time frames, you must honour those during the process.

Employee Rights to Appeal Termination of Employment

Employees all have the statutory right to appeal against all disciplinary and grievance decisions that they consider wrong or unfair.

There are 2 ways an employee might challenge their dismissal:

  • Appealing through your appeal process—this is always allowed for the employee and will make it an unfair dismissal claim if they are not allowed to appeal.
  • Making a claim to an employment tribunal.

For unfair dismissal claims, they must have worked for you for two years.

If there is they are being dismissed for an 'automatically unfair' reason discriminated against, they can make a claim to a tribunal no matter how long they worked for you.

Medical Termination of Employment

You’re within your right to do this, even during the new starter’s first few months.

You may have to consider dismissing an employee if they have to take time off work to recover from an illness or injury.

There are laws regarding the termination of employment for employees suffering from ill-health. Namely, you may only dismiss an employee fairly for one of five reasons.

These are:

  • Misconduct.
  • Redundancy.
  • Illegality.
  • Capability
  • Other substantial reasons.

Dismissing staff due to sickness is dependent on their capability. You must ensure that the reason the employee is being dismissed is because of the incapability of that staff member to perform tasks.

You’ll also have to show that you’ve given them fair opportunities to improve. It’s important to have a procedure in place to avoid claims of discrimination or unfair dismissal.

It should always be a last resort after exhausting other efforts. Remember to consider reasonable adjustments such as flexible working hours, remote working or issuing alternative responsibilities.

Termination of Employment During Maternity Leave

It is a tough topic, but sometimes it is legal to end the employment of a pregnant woman.

When doing this, the usual rules of dismissal must apply. It cannot relate to the pregnancy, concerns over returning to work, maternity leave or any sicknesses associated with pregnancy.

A dismissal because of these issues is an automatic unfair dismissal, however long they have been in employment. This can also be discrimination which brings with it an unlimited fine.

Unlike women on maternity leave, pregnant women who have not yet started maternity leave have no special protection in a redundancy situation.

However, the redundancy selection criteria must not take into account reasons connected to pregnancy (including pregnancy-related illness) or maternity leave.

Similarly, it is not unlawful to dismiss an employee on maternity leave, adoption or shared parental leave. As long as the dismissal is not because of any reasons related, it is not an automatic unfair dismissal for pregnancy or maternity discrimination.

Termination of Employment Due to Dishonesty

As mentioned before, there can be grounds for dismissal based on insubordination, gross misconduct or a breakdown of the employment relationship. One example is dishonesty.

This comes in many forms, ranging from stealing cash or goods to falsification of records such as expenses, application forms or accident reports.

There are also dishonesty offences of stealing confidential information, stealing electronic data or databases, deliberately downloading malware and perpetrating or assisting in the perpetration of cyber-attacks.

These should be clearly stated as examples of gross misconduct and listed in the disciplinary procedure.

Termination of Employment Before the End of the Probation Period

Most employment contracts will have a probationary period at the beginning of their employment.

According to Acas’s code of practice during the probation period, it entitles employees to a statutory notice period of one week. This applies if they’ve been in employment for one month or more (up to two years).

Recommended Procedure

  • In writing, invite the employee to a probationary review meeting where you’ll discuss issues relating to their performance.
  • In the letter, inform them you’re considering terminating their contract.
  • Offer evidence that supports your concerns and give them the opportunity to respond.
  • Decide on appropriate action. Before terminating the contract of employment, consider extending the probation period.

Communicate the outcome to the staff member with a written statement.

We Can Help You with the Stress of Termination

Termination of a contract can often be a difficult and stressful period. To ensure you follow all the right procedures to protect yourself can be a minefield.

Are you wondering about the next steps? We can help you move in the right direction. We’re happy to help, just call us on 0800 470 2432.

Lucy Cobb

Employment Law Specialist

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