What do we refer to in employment law when we talk about termination of employment? Our advisors have seen employers share the common misconception that it refers to dismissal only. However, you need to understand what the different types of termination of employment entail and how to manage each of them.
One of the most frequently asked questions we get at Croner is how to best handle a dismissal. It does stand out as the least desirable outcome when you have to let an employee go. So, it isn’t surprising many people misunderstand that termination of employment in the UK means dismissal.
In this article, we will discuss end-of-employment best practices that will help you reduce the risk of tribunal claims.
Types of Termination of Employment Contracts
Termination of employment refers to when an employee ceases to work for a company. How their employment for the organisation ends will depend on where the decision comes from.
The most common paths of terminating employment in the UK are:
- End of a fixed-term contract
When the employee decides to leave the company, they hand in their resignation to inform the employer about their decision. Depending on the reasons behind it, the employer can try to persuade them to keep their position.
If one of your best-performing employees decides to leave, they might be looking for better pay or a new challenge. See if you can give them what they need to progress in their career so that they stay with you. It might be moving them to a different role or offering a better pay and benefits package.
When a fixed-term contract ends, the company could make a permanent offer if the employee proved to be an asset to the business.
You might have to make some of your staff redundant when your business changes. We thoroughly cover the redundancy process in this Croner article.
When an employee reaches retirement age, it is still their decision to end employment. By law, you cannot force them to retire.
Let’s look next into employment law termination of contract requirements.
UK employment law and termination of employment
As we highlighted above, either you or your employee can decide to end the collaboration. Regardless of whom the final decision lies with, you must observe employee rights on termination of employment. These rights come with obligations on their part too, as we will detail below.
If you employed them for more than two years, you need to follow the dismissal procedure. Most importantly, you must justify the reason for dismissing them and support it with relevant records and documentation.
Avoid giving grounds for unfair or wrongful dismissal claims which will cost you time and money in an employment tribunal. Omissions could potentially be used to support such claims.
Whether you dismiss a staff member, make them redundant or offer to retire them, you need to give notice of termination of employment. The same applies if an employee wants to leave their position within your company. How much notice both of you need to give depends on two factors: the law, and their employment contract.
The law specifies the minimum notice required to terminate employment, also known as the statutory notice period. Their contract should also include an employment termination clause.
When ending an employee’s service to you, send them a termination of employment contract letter. This will communicate the reasons, notice period and other relevant terms.
If an employee decides to leave the company, they should give a termination letter to the employer. Most contracts require them to do so if they want to end their employment.
What about termination of employment during the probationary period?
You could consider dismissing a new starter during their probation. Remember, you have to give them a one-week statutory notice period, if they’ve worked for you for a month already. While you do not have to give notice if terminating their employment during their first month, consider following the steps highlighted in this article.
By adhering to best practices in HR, you demonstrate high employment standards and protect your reputation in the long run.
Always remember the reason for having a probation period. It is meant for both employer and employee to assess if their collaboration suits them both. How well your new starter performs also depends on how well you support them, so avoid judging them too harshly, too soon.
Termination of employment due to poor performance in the UK
Concerned about the performance of a new starter or long-term employee? Don’t allow the matter to escalate, or worse, go unaddressed. Make sure you address such concerns through regular feedback and discuss them in staff review meetings. Think of what could help your employee and offer them solutions, such as training or reasonable adjustments. This gives them a fair chance to improve.
Following these steps, as highlighted by the ACAS Code of Practice, might feel like a lengthy process. See it this way – it will protect your business from loss of trust, loss of reputation and tribunal claims.
Get free support from Croner
Termination of employment is not a desirable outcome for any employer or employee. Business growth also relies on retaining skilled workers and their professional advancement within the company. However, challenging times often cause businesses to shift, restructure, and rethink.
If you are dealing with such challenges and have to let employees go, don’t feel like you have to face it alone. Our experienced advisors on our 24-hour HR advice line will support you throughout the process. Whether you are looking to dismiss an employee or retain them when they decide to leave the company, we can help.
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