close up of legal contract

Terminating Employment

There are four main situations which lead to the end of an employment relationship. An employee choosing to leave, the employer terminating employment for a reason, the employer being forced to terminate employment due to redundancy or the expiry of a fixed term contract.

Notice periods

If any employer wishes to terminate an employee’s employment they must give them notice. Employees with between one month and two years continuous employment are entitled to at least one week’s notice from their employer. Employees with continuous employment of two years’ or more are entitled to one week’s notice for each complete year, up to a maximum of 12 weeks’ notice. These are the minimum statutory notice periods.

An employee and employer can agree a longer notice period as a term of the employment contract.

Unless agreed otherwise, the contract of employment will continue to operate as normal during the notice period. The employee is obliged to attend work and perform the job and the employer is bound to pay the employee and carry out its obligations under the contract.

Alternatives to working the notice period

Garden leave

When the relationship between employer and employee has already deteriorated, it is often preferable for the employee not to remain in the workplace for the duration of the notice period. The employer will, however, still have to pay the employee all their salary and benefits for the duration of the notice period.

In some circumstances it is possible to reach agreement that both parties will waive their rights to the notice period. This may be especially useful if the employee has a new job lined up and the employer is happy to let them go. In these circumstances the employer would be relieved of the obligation to pay the employee for the notice period. If such an agreement is reached, it is good practice to record its terms in writing in a document signed by both parties.

Payment in Lieu of notice

If an agreement cannot be reached, and the option is expressly permitted in the employment contract, an employer can sometimes pay the employee in lieu of notice. This means that the employee will stop work and receive a single payment of money representing the wages which they would have earned during the notice period. If an employer makes a payment in lieu of notice and it is not permitted by the employment contract then they will be in breach of contract.

Compromise Agreements

If an employee feels that they have not been treated fairly in being dismissed, and they meet certain qualifying criteria, they may be able to bring a claim for unfair or wrongful dismissal. This can lead to an employment tribunal claim which can be costly and time consuming for both parties.

In some circumstances the employee and employer can choose to settle a claim without going to the tribunal. Generally an employee cannot waive their statutory employment rights, however, provided certain procedures are followed, an employee can waive their rights, usually in return for a payment from the employer. This procedure is then evidenced in writing and known as a compromise agreement.

Helen Paull

Helen Paull

About the author:

Helen Paull is a newly qualified solicitor at Lindleys Solicitors specialising in company/commercial law and commercial property matters.