The below will focus on the termination (ending) of an employment contract between an employer and an employee.
Termination of an employment contract may happen in various ways. For more guidance on claims that an ex-employee may make related to dismissal, please see the Disputes/Disciplinary procedures section*.*
An employee and employer may come to an agreement that they both wish to terminate the employment contract. In this case, the employer must make sure that the employee’s agreement to terminate the contract is not as a result of the employer’s breach of that contract. For more information, see “Constructive Dismissal” below.
An employment contract will often provide that if the employee wishes to resign, they must give notice to the employer. The written particulars of employment (discussed in the Hiring, pay and ongoing responsibilities section) must include the length of notice which the employer is entitled to receive. English law requires a minimum notice period of one week.
If the employee leaves without giving the minimum notice, then technically they have breached their employment contract. However, it is unclear in English law what remedies the employer can seek against the employee.
The most important point to keep in mind here is that, if an employer dismisses any employee who has been employed for two or more continuous years without a valid reason and following a fair process, the employee may be able to take action against the employer and receive compensation and/or another award (see the Disputes/Disciplinary procedures section*).*
There are four types of dismissal:
1. Fair dismissal: If an employer has a valid reason for dismissing an employee, then their dismissal is fair. This is the only way you can dismiss an employee without facing liability. The five “fair” reasons for dismissing an employee are as follows:
Capability or qualifications – an employee’s capability, or their ability to do their job, is related to skill, health or any other physical or mental quality. If an employee is so ill they cannot do their job, this may be a fair reason to dismiss them. However, if their illness may be considered a disability, then an employer should be careful that it is not discriminating against someone on the basis of disability, as it is a protected characteristic. If an employee requires certain qualifications (such as a university degree or a driving licence) to do their job and they lose these qualifications, or it turns out that they lied about having these qualifications, then they may also be fairly dismissed.
Conduct – this relates to the behaviour of the employee. It could include disobeying orders, breach of their employment contract, violence at work, or repeated poor attendance. The act of misconduct could be a severe one-off action or a series of less severe actions. It does not necessarily have to occur in the workplace, as long as it affects the employee when they are doing their work.
Redundancy – if an employee has been dismissed because:
then the employee has been dismissed due to redundancy. In this situation, the employee will be entitled to a redundancy payment if they have been continuously employed for two years before the date of dismissal. This payment is based on their age, length of employment and average wage.
Statutory restriction – where the employee cannot continue to work because some law or regulation would make it illegal.
“Some other substantial reason” – past examples of this include where the relationship between the employer and the employee has broken down, the employee was imprisoned, or where there was a necessary reorganisation of the business (as long as the employee was fairly considered for another position within the business).
2. Unfair dismissal: All dismissals of certain employees will be unfair unless:
There are also many 'automatically unfair' reasons. If an employee is dismissed for one of these reasons, then their dismissal is considered to be unfair despite what the other circumstances were. Examples include:
Not all employees may make a claim for unfair dismissal. In order to make a claim for unfair dismissal, they need to have been in continuous employment for two years. However, if they have been dismissed for an 'automatically unfair' reason, then it does not matter how long they have been working for the employer.
3. Constructive dismissal: This is when an employee resigns because the employer has breached their employment contract. An employee may not feel like they have a choice but to resign if their employer breaches their employment contract in a very serious manner.
4. Wrongful dismissal: This is when an employer dismisses someone without following the correct process. For example, if an employer dismisses an employee without giving them the required minimum notice period. This is set out in law, and the employment contract may set a longer period. Therefore, even if the employee is dismissed for a “fair” reason, it can still be wrongful dismissal.
If a dismissal is wrongful, constructive or unfair, and the employee takes action against the employer, the employer may be ordered to compensate the former employee, or even to re-employ them. See more about remedies in the Before hiring section and“Fixed term contracts” employee contract type.