Employment Law: Navigating Termination, What UK Employers Should Know

In an ideal workplace, employers would never face the challenge of ending an employment relationship. Employees would consistently meet expectations, avoid any inappropriate behaviour and remain in good health. Redundancies wouldn’t exist and businesses would flourish effortlessly. 

However, the reality is far from this utopia. Most employers will, at some stage, need to issue a notice of termination of employment. Here, we explore the legally acceptable grounds for termination and the steps you can take to minimise risk while maintaining compliance with employment laws.

1. Fair grounds for termination

Under UK law, there are five potentially fair reasons for dismissal:

• Conduct – Such as inappropriate behaviour or breach of workplace policies.
• Capability – Relating to health issues or poor performance.
• Redundancy – When a role is no longer required.
• Statutory Reason – For example, if an employee’s visa expires, making their employment unlawful.
• Some Other Substantial Reason (SOSR) – A catch-all category, such as the return of an employee from maternity leave who was being temporarily covered.

While these are deemed potentially fair, employers must also follow a procedurally fair process. For example, when dismissing for misconduct, a thorough investigation must be conducted, and the employee must have the opportunity to respond, bring a workplace companion to any hearing and appeal the decision if necessary.

2. Documenting the termination: the letter of termination

All dismissals must be confirmed in writing with a formal letter of termination of employment. This document should outline:

• The reason for dismissal.
• The effective termination date.
• The process for appealing the decision.

For disciplinary dismissals, the reasons provided must align with those initially cited in the disciplinary hearing notice.

3. Right to appeal

Granting the employee the right to appeal is a cornerstone of a fair dismissal process. The appeal process should be clearly explained in the termination of employment contract letter. Ideally, a different manager from the one who made the original dismissal decision should oversee the appeal.

During this period, the employee remains dismissed while awaiting the outcome of the appeal, avoiding any presumption of reinstatement.

4. Service length and tribunal claims

A common misconception is that employees must have two years of service to bring a claim to an employment tribunal. While this is generally true, there are notable exceptions, such as:

• Dismissals based on discrimination (e.g., age, race, disability).
• Dismissals linked to whistleblowing or asserting statutory rights.
• Dismissals due to trade union activities.

It’s prudent to address any performance or conduct concerns early in employment and maintain thorough records of discussions during probation and beyond.

Moreover, employers should exercise caution when dismissing employees approaching their two-year work anniversary. Legislative changes, such as the proposed Employment Rights Bill, may further reduce reliance on the two-year service threshold.

5. Statutory notice requirements

Employers must provide notice that meets statutory minimums, which differ based on service length:

This statutory obligation often exceeds the notice period employees are required to give, so careful consideration is essential during redundancy or termination planning.

6. Notice or no notice?

Typically, employees should receive notice in line with their contract. Failure to provide this could constitute a breach of contract. However, there are exceptions:

• Gross Misconduct: In cases of serious misconduct, summary dismissal may apply, where employment ends immediately without notice or pay. A fair disciplinary process must still be followed and contracts should explicitly reference this provision.
  

7. Alternatives during the notice period

When issuing a notice of termination of employment, there may be instances where it’s inappropriate for the employee to work their notice:

• Garden Leave: Employees remain on the payroll but are prohibited from performing work or contacting clients. To enforce this, contracts must explicitly include a garden leave clause.
• Pay in Lieu of Notice (PILON): When it’s impractical for the employee to work their notice, employers may provide a payment equivalent to their notice period’s earnings. PILON is taxable and ensures employment ends immediately upon dismissal.

Conclusion

The process of dismissing an employee can be legally complex and fraught with risks. From issuing a letter of termination of employment to navigating notice periods, every step must comply with employment law. Employers must approach this with diligence to avoid potential tribunal claims or disputes.

At Mad-HR, we offer expert guidance to help you manage these challenges effectively. Whether you need advice on a settlement agreement, handling a final paycheck, or navigating redundancy processes, our team is here to support you. Get in touch today to ensure your termination processes are legally sound and professionally handled.