What is termination of employment?
Your employment contract can be brought to an end in many different ways. This is called termination. Termination can be resignation, dismissal, redundancy or retirement and is addressed in Part IX of the Employment Rights Act 1996 (ERA 1996). The method of termination will determine whether you have a claim in the employment tribunal or not. If a termination is a dismissal you will have various statutory rights laid out in the ERA 1996 and other employment legislation. If you resign, you will have no claim from your employer unless your resignation was a constructive dismissal. Regardless of the reason for termination your employer must follow procedures for notice and termination which are laid out in law, otherwise you could have a claim for breach of contract, wrongful, unfair, constructive dismissal or discrimination under the Equality Act 2010.
A termination occurs;
- On the expiry of a fixed term contract
- When a specified event happens
- By you and your employer agreeing to terminate
- By your employer making a payment in lieu of notice
- By you walking out because of a fundamental breach of contract by your employer (constructive dismissal)
- By your employer asking you to leave the workplace with or without notice
- By frustration
Expiry of a fixed term contract
The expiry of a fixed-term contract is a dismissal for the purposes of unfair dismissal and statutory redundancy pay if you have been continuously employed for two years. For the dismissal to be fair it must be for one of the potentially fair reasons in s98 ERA 1996 and your employer must use a fair procedure. Under the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 you can bring a claim in the employment tribunal if you are treated less favourably than a permanent employee or suffer any detrimental act by your employer because of your employment status.
When a specified event happens
Some employment contracts say that they will end when a particular event occurs (or does not occur). The situation here is the same as with the expiry of a fixed term contract. If your employer does not renew your contract, it is a dismissal and potentially unfair depending on the circumstances.
You and your employer agreeing to terminate the contract
Under ERA 1996, all contracts of employment must state the length of notice that the employee is obliged to give and to receive to terminate the contract. If you and your employer agree to end your contract, then it is terminated by mutual consent and in theory you will not have a claim against your employer. If however, there is evidence to show that you were forced to agree, then an employment tribunal could decide that you were in fact dismissed.
Your employer making a payment in lieu of notice
Under s86 (3) ERA 1996 you are entitled to receive a minimum notice of termination or notice in accordance with the provisions of your contract. Your right to notice is a right to be given advance warning that your employment is about to end, not just to be paid for it. You can waive your right to the statutory minimum notice in s86 ERA 1996 and accept payment for the notice period. This means you leave the workplace immediately but are paid as if you were at work for the period when you would have been working out your notice.
You walking out because of a fundamental breach of contract by your employer (constructive dismissal)
Under s.95(1)(c) ERA 1996, you can walk out of the job with or without notice where your employer has fundamentally breached the employment contract. This would be a constructive unfair dismissal. Your employer can bring a claim for breach of contract against you if you resign without giving the notice due and your employer suffers financial loss as a consequence.
Your employer asking you to leave the workplace without or without notice
Your employer can end the employment contract with or without notice because of your conduct. There are generally two types of conduct dismissals – one where you receive a number of warnings which ultimately end in your dismissal, and the other where your gross misconduct allows your employer to dismiss you without notice or payment in lieu of notice.
Frustration is when something happens that neither you or your employer was expecting, and it makes the employment contract impossible to carry out or very different from what it originally was. If an employer should die (if your employer is a sole trader), or an employee is imprisoned or too ill to work, the contract would be frustrated and so come to an end.
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Best of the web
Money Advice Service – Redundancy Pay calculator
GOV.UK – Renewing or ending a fixed term employment contract
ACAS – Terminating employment – notice periods and pay
This resource is published by Employee Rescue Limited. Please note that the information and any commentary on the law contained herein is provided for information purposes only. The information and commentary does not, and is not intended to, amount to legal advice. Employee Rescue accepts no responsibility for any loss occasioned to any person acting or refraining from action as a result of the material contained in this publication.
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