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Termination of Employment

Employees benefit from certain employee rights under UK law. If you need to terminate an employee's employment, it is important to ensure that you terminate the agreement in accordance with the law. Failure to do so can result in high fines or the termination not being valid.

What is important to keep in mind when terminating a person's employment?

  • Termination of employment may take place due to lack of relevant work tasks or on personal grounds.
  • The notice of termination must always be given in writing.
  • Terminations can be emotional. Make sure to announce a termination in a professional manner, and try to find a common ground for termination that feels fair for both parties.
  • In some cases, it is better for the employer and the employee to agree that the employment should be terminated. In this case you will often need to make some form of compensation payment to the employee.
  • If you have a collective labour agreement with a trade union, remember that these often contain rules for termination and you will need to ensure you comply with any relevant provisions of the collective labour agreement.

What is the reason for terminating the contract?

    Different rules apply depending on the reason for the termination. Some common reasons for terminating an employee's employment are set out below.

    Lack of relevant work tasks

    The employer decides if there is a shortage of work tasks relevant to the employee's employment. If the termination is questioned and challenged in court or at tribunal, the employer must be able to prove this, as well as being able to show that the termination is either based on commercial or operational grounds.

    Personal grounds

    Personal grounds exist when the employee acts unacceptably and is also aware that the behavior is unacceptable. Examples include poor work performance, collaboration difficulties, breaches of codes of conduct.

    End a probationary period

    If you want to terminate a probationary period, you must notify the employee no later than two weeks before the probationary period expires. If the employee is a member of a trade labour union, the union must also be notified.

    Agreement to terminate

    Employers and employees can at any time jointly agree that the employment shall be terminated. The difference between an agreement on termination, and termination, is that the employee voluntarily agrees to terminate on certain conditions (e.g. compensation in the form of severance pay). By using a voluntary agreement, you avoid the potential of long and costly court disputes about invalid termination. The parties usually enter into a settlement agreement that regulates the terms of the termination of the employment.

    Common mistakes when terminating an employment

    • Failing to provide a written notice of termination (e.g. the employer only informs the employee orally).
    • Terminating the employee's employment without proper grounds. It is important to ensure that there is a genuine reason for an employee to be laid off and that this reason is documented.
    • The employer does not give notice in time that the probationary employment being terminated. This results in the employment becoming a permanent employment arrangement, meaning that the usual rules for termination apply.

    Please note there is a big difference between dismissal and termination. This information does not include termination of employment by dismissal.

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