UK: Termination of employment

Updating author: Jo Broadbent, Hogan Lovells International LLP

Original author: Darren Newman

See the legal services provided by the updating author of International > United Kingdom, including any discounts/offers for subscribers.

Summary

• Employment contracts may terminate in various ways, but the statutory framework focuses mainly on dismissal, which occurs where the employer brings the contract to an end, with or without notice, or does not renew a fixed-term contract, or where the employee resigns by virtue of the employer's conduct. (See General)
• Employers and employees must generally give a statutory minimum period of notice when terminating the employment contract. (See Notice periods)
• Employees have a right not to be dismissed unfairly. In most cases, this applies only to employees with at least two years' continuous service with their employer, but this qualifying period does not apply when the dismissal is for one of a number of automatically unfair reasons specified by statute. (See Unfair dismissal)
• An employer is entitled to dismiss an employee summarily, without notice, if the employee has seriously breached the employment contract and continuation of the employment relationship has become impossible. (See Summary dismissal)
• A "constructive dismissal" occurs when the employee resigns as a result of the employer's conduct, and that conduct amounts to a fundamental breach of contract. (See Constructive dismissal)
• A "wrongful dismissal" is a dismissal that is in breach of the employment contract, usually where the employer dismisses the employee without giving the required contractual notice. (See Wrongful dismissal)
• Employees with at least two years' continuous service who are dismissed by reason of redundancy are entitled to a statutory redundancy payment from their employer. (See Redundancy rights)
• There is no mandatory retirement age and, if an employer compels an employee to retire at a certain age, this will generally constitute unlawful age discrimination (unless such a compulsory retirement age is objectively justified as a proportionate means of achieving a legitimate aim). (See Retirement)
• Except in cases of redundancy, employers are not required to accompany the dismissal of an employee with any payment other than in respect of wages due and annual leave entitlement that has accrued but not been taken. (See Termination payments)
• Where an employee has been unfairly dismissed, an employment tribunal may order the employee's reinstatement or re-engagement or, much more commonly, award compensation. The compensation is made up of a basic award, based on the employee's length of service, age and wages, and a compensatory award that reflects the employee's actual losses as a result of being unfairly dismissed. (See Contesting dismissals)