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In the UK, there are several valid reasons to terminate an employment contract in the UK. We consider each in turn below.
‘Gross misconduct’ includes behaviour such as theft, fraud, physical violence, serious breaches of health and safety regulations, and gross negligence. If an employee is found to have committed any of these offences, they can be summarily dismissed without notice or compensation.
‘Capability’ includes poor performance and health reasons. Capability is usually determined by a period of underperformance against set targets or objectives. Before taking action on this ground, employers must ensure that they have given the employee reasonable time to improve their performance and that they have been provided with adequate training and support. Procedures for dealing with poor performance should be set out in the employee’s contract of employment.
If an employer does decide to take disciplinary action against an employee for capability reasons, they must follow a fair process. This includes holding a meeting with the employee to discuss their concerns, giving them the opportunity to improve their performance, and offering them appeal rights if they are unsatisfied with the decision. Only after all of these steps have been taken should an employer consider dismissing an employee for capability reasons.
Redundancy arises when an employer needs to reduce its workforce due to economic factors such as a downturn in trade or the introduction of new technology. To lawfully make someone redundant, an employer must first consult with any affected employees and try to find alternative positions for them within the organisation. Statutory redundancy pay may be payable on redundancy.
An employee can also be dismissed if a circumstance arises where the employee is legally unable to do their job. For example, if a driver loses their driving licence.
Employment can also be terminated by mutual agreement between the employer and employee. Although there is no entitlement in this instance to severance pay, this kind of arrangement is often carried out under a settlement agreement which includes an amount of financial compensation that is usually equal to or higher than a statutory redundancy payment.
A dismissal could be found to be unfair if the employer does not have a valid reason for dismissing the employee (as outline above), or if they have not followed the company’s formal disciplinary or dismissal process.
When dismissing an employee in the UK, employers must provide written notice by email with confirmation receipt, or via standard mail. Employers must make any due payments including severance pay if applicable and any accrued holidays. Even if severance pay is not a statutory requirement, it is recommended to make a severance payment in any case.
Resignation is generally given in writing, but unless stipulated in the employment contract it can also be given verbally. Unless the employment contract stipulates otherwise, the minimum notice period is usually 1 week for up to 2 years of employment and thereafter is 1 week for each year of employment up to a maximum of 12 weeks.
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It is not difficult to terminate staff in the UK as long as the reason for dismissal is valid and the correct processes have been followed. It is important to be aware of the relevant legislation to avoid expensive tribunal cases.
To terminate employment in the United Kingdom, you should ensure that your reasons for termination are valid – as outlined above. In cases of unfair dismissal, the employee may be entitled to substantial compensation.
It is especially important to exercise caution if you want to terminate a protected class of employee (e.g. pregnant employees, employees on parental leave, and those who have taken parental leave within the last year). In many cases the risks of terminating these employees far outweigh any benefit.
You can mitigate the risks of terminating employment by partnering with a company like Horizons, who has experts in UK employment law and can advise you on best practice in termination cases.