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How your employment can come to an end – for employees

Posted on Mar 31st, 2017 | Employment law

Our Crunch advisors are only able to answer accountancy related questions. If you have an employment question please either leave a comment below or phone the Acas Helpline on 0300 123 110.

There are various ways your employment can come to an end – but if you are an employee you have the right not to be unfairly dismissed. From 1st October 2011 those defined as ‘agency workers’ will also have a right not to be unfairly dismissed for reasons relating to the Agency Workers Regulations.

Your employer, in certain circumstances, can change your terms and conditions of employment.

If you are an employee – how your employment can come to an end

If you are an Apprentice read our Guide to Apprenticeships as there are some differences.

If you are a Freelancer/Contractor you can read here what rights you have if your client cancels your contract here.

Fed up of the nine to five? Find out more about working for yourself.

Giving notice

You or your Employer can give notice to end your employment if you are a permanent employee.

Information about Probationary Periods are here.

Your contract should contain reasonable notice periods that you or your employer can give each other. There are minimum periods of notice required by law, which are:

  • You must give your employer a minimum of one week’s notice if you resign and have one or more month’s service.
  • Your employer must give you one week’s notice if you have between one month and less than two years service; at least two weeks notice if you have been employed continuously for two years; and an additional week’s notice for each further complete year of service (up to 12 weeks). If you have been employed on very short fixed-term contracts of under one month and they have been extended (each time for under one month) then you will be entitled to one week’s notice once you have been continuously employed for three months.
  • Your employer can, however, end your contract without notice if your conduct justifies it (which is called ‘gross misconduct’) – see point five. below to read more about the correct procedures your employer needs to follow.

However, your contract may specify longer periods of notice that you would need to give if you were resigning, or your employer would need to give you if they were dismissing you (and these longer notice periods would apply). You can choose to agree to waive your rights to give/receive the full notice period, or agree to accept a payment in lieu of taking the full notice period.

If you resign with immediate effect and refuse to work your full notice period, you’ll technically be in breach of contract – unless your employer has acted in a way towards you that represents a fundamental breach of contract – and your employer can refuse to accept your resignation and doesn’t need to pay if you refuse to work. The Courts don’t have the authority to compel an employee to work, but the employer can apply for an injunction to prevent you from working for a competitor during the outstanding part of the notice period. An employer could also sue the employee for breach of contract, but this is very unlikely due to the expense involved. Your employer may also refuse to provide a reference for you to any future employers.

If you are dismissed without being given the proper notice you are required to by your Employer (the legal minimum or your contractual notice, whichever applies), your length of service is calculated by adding on the legal notice you should have been given – when you are working out how long you have worked for your Employer. However, if you are calculating your service to make an Employment Tribunal claim (for unfair dismissal for example), your employment is treated as ending on the day you were dismissed (i.e. you need to include the notice period you are entitled to within the 3 month time limit you have to make a Tribunal claim).

In Newcastle Upon Tyne NHS Foundation Trust v Haywood 2017, the Court of Appeal looked at when notice of termination was effective. The Employer had given notice to the employee while she was away on holiday – by emailing her husband and posting the letter by recorded delivery and normal post. The contract did not contain any terms setting out when notice would take effect. The Court felt the employer was not authorised to communicate with the husband and that, since the employee did not read the letter until she returned home, the date the termination took effect was the date she personally read the letter. The date was significant for Haywood because she was turning 50, which would have entitled her to a higher pension.

Retirement

Before 1st October 2011, you could be retired if you reached the default national retirement age of 65. This automatic default retirement age was removed from 1st October 2011 – for details see our updated Guide to Retirements here.

Fixed Term Contracts

Where you are employed on a Fixed Term contract, your written statement should state the date the contract is expected to end. Generally your employer does not have to give you notice of this expiry date.

However, your employer may be able to terminate your contract before it’s nominated end date, if this is written into your contract, by giving the appropriate notice period (as in point 1. above).

If you do not have a notice period in your Fixed Term contract and it is ended early, this may be a breach of contract and you may be able to claim damages.

If your Fixed Term contract ends on its expiry date and is not renewed, or you are given notice to end it early, and you have one years continuous service with your employer, you are entitled to ask for a written statement from your employer explaining the reasons for your contract ending (or 2 years if your employment started on or after 6th April 2012).

If you are unhappy about this, you should have the right to ask for an appeal under your employers dismissal procedure.

For more details about Fixed Term Contracts ending, please see our new article on Fixed Term Contracts here. For details about being employed on a Fixed Term contract during maternity leave, please see here.

Forced resignations (Constructive Dismissal)

You may feel that you have no choice and are being forced to resign and claim constructive dismissal.

This may happen if you feel a serious incident has occured at work, you’ve been treated sufficiently poorly and are unable to continue working for your employer, so you terminate your employment in response to your employers treatment of you – e.g.

  • A breach of your contract, such as your employer not paying you or suddenly demoting you for no reason;
  • Your employer forces you to accept unreasonable changes to your conditions of employment without your agreement;
  • Where the employers behaviour has breached the term of mutual trust and confidence that’s implied in all contracts of employment (employers and employees can’t conduct themselves in a manner that’s likely to destroy or seriously damage the relationship between the two parties), such as humiliation, bullying, harassment or violence against you by a coworker
  • Making you work in dangerous conditions.

Although there is no actual dismissal, your Employers treatment of you is sufficiently bad that you are entitled to regard yourself as having been dismissed.

In a case in September 2013 – Blackburn v Aldi Stores Ltd – the Employment Appeal Tribunal found that failure to provide an impartial grievance appeal process could potentially amount to a breach of the implied term of trust and confidence and form the basis of a constructive dismissal claim ; the same Manager had heard the Grievance and the Appeal, and the EAT found that an organisation of Aldi’s size should be able to provide an independent hearing by a manager not previously involved in the case.

In July 2016 in Nicholsdon v Hazel House Nursing Home Ltd, the employee who was pregnant asked her nursing home if she could switch shifts from the morning to the afternoon, which her employer agreed to do, but then reduced her shifts from 5 to 3 a week without consulting her. This meant she qualified for maternity allowance only not SMP. She put in a grievance which was rejected. She then resigned and later put in an appeal against the grievance decision but then did not respond to the request for further information and the appeal was not held. The case went to the Employment Appeal Tribunal who said she had been constructively unfairly dismissed and the reduction in shifts was pregnancy discrimination.

Before you resign and claim constructive dismissal you should raise an internal grievance first, otherwise an Employment Tribunal may refuse to hear your constructive dismissal claim or reduce any compensation you may receive. Constructive dismissal is notoriously difficult to prove so tread carefully and take advice from a qualified person. You cannot make a claim for constructive dismissal itself, but if you can demonstrate the you have been dismissed you can go onto claim unfair or wrongful dismissal.

To succeed in a constructive dismissal claim the employee has to show that they have resigned in response to a fundamental breach of their contract by the Employer. You can resign by giving notice (you do not have to walk out immediately) but ideally this should be no longer than your contractual notice, as this is likely to invalidate your claim (as you have affirmed the contract). Similarly, if you are on sick leave you should not accept sick pay over a long period of time before resigning. Read our article here for more information on what to do if you are unhappy about changes your Employer is making to your contract/terms and conditions of employment.

Employees must show that their decision to terminate their employment was in response to a breach of contract, and not because they’ve been offered a better job, for example, and they shouldn’t delay resigning for too long, either. You shouldn’t leave too much time between the employer’s breach of contract and your resignation, or you’re deemed to have accepted or waived that breach. There’s no time period laid down – it depends on the context. For example, if the employee isn’t at work during the period before the resignation (off sick for example), time is less of an issue. Similarly, the employee’s personal circumstances may dictate how long the employee needs to make up their mind to resign (sole family earner, likely re-employment prospects etc).

In Chindove v William Morrisons Supermarkets in August 2014 the Employment Appeal Tribunal found that the fact an employee was on sick leave was a relevant consideration when determining whether a delay in resigning would prevent a claim for constructive dismissal.

In August 2018, in Decker v Extra Personnel Logistics Ltd, a recruiter who refused to accept a pay cut successfully won a constructive dismissal claim at Employment Tribunal. Mr Decker was employed from 2008, until he left in July 2017, claiming constructive dismissal. He initially worked 40 hours per week but this was cut to 32 hours in 2015, and in February 2017 he was asked to cut his hours to 16 per week, as the agency had lost two contracts – this would have meant him losing £205 pay per week. Decker said he could not afford this but was willing to reduce his hours to 24 per week if his daily rate was increased from £102.97 to £110.00. Mr Decker thought the Company had accepted this but on 1st June 2017 the MD said they could not offer a pay rise and asked him to sign a new contract – Decker resigned on 5th June 2017. The tribunal felt the employer “had fundamentally breached” Decker’s employment contract and had not followed the Acas code of practice on disciplinary and grievances (as they felt an e-mail from Decker laying out the issues he had with the company’s action had failed to be treated as a grievance).

Read our article here on large-scale dismissals.

Fair/unfair dismissal

There are various reasons why your employer can dismiss you – there are fair and unfair reasons.

You have a right to request a written statement explaining why you have been dismissed and whether you have received notice or not, if you have been employed continuously by your employer for two years.

NB: Regardless of the reason for your dismissal your employer must also act fairly in the procedure they follow to dismiss you.

There are five potentially fair reasons for an employer to dismiss you – if you have two years or more continuous service with your Employer (in England, Scotland and Wales) you may be able to make a claim for unfair dismissal at Employment Tribunal if you believe your dismissal is incorrect; you will only need one years service in Northern Ireland. For more details about continuous service see our guide here:

  • Poor Conduct (you break a term of your employment) – e.g. behaviour that is thought to be unacceptable – continually missing work, poor time-keeping, refusal to obey a reasonable instruction, poor discipline, theft or dishonesty (which can include lying about sickness). Your employer should follow a fair disciplinary policy to dismiss you for such misconduct. Some forms of unacceptable behaviour are called gross misconduct, e.g. theft and violence at work, harassment of customers and employees, drinking or taking drugs at work (and see our new information on Drug Driving Regulations here) – your Employer should outline what ‘gross misconduct’ means in your organisation. You can, in certain circumstances, also be dismissed for misconduct outside of the workplace (reputational damage). Dismissals for gross misconduct can be ‘summary’, i.e. serious enough that you will not receive notice to end your employment. If your Employer follows a fair procedure, dismissal for gross misconduct will probably be a fair dismissal if they can show that at the time of the dismissal they believed the employee to be guilty of misconduct and that they had reasonable grounds for believing this, having carried out “as much investigation into the matter as was reasonable in all the circumstances”.
  • Your capability (you can’t do your job properly or are not performing to the required standards) – e.g. you don’t get along with working practices, colleagues or new technology; you have long term or frequent illnesses that make it impossible for you to do your job. To make this a fair dismissal your employer needs to make sure you’ve had adequate training to do your job and that you’ve had at least one warning that your work isn’t satisfactory and has given you a chance to improve. If you’re off sick your employer needs to make sure that the job is suitable for you and you’ve had adequate time to recover; if you are dismissed on the grounds of incapacity (for health reasons) your Employer must have a followed a fair procedure which will include consultation with you and must have obtained medical evidence to determine whether you can continue to be employed and whether your sickness levels will continue at the same level. Courts, when considering if a dismissal for ill-health is fair or unfair, will consider whether the employer could reasonably be expected to wait any longer for the employee to be fit to return to work (which will include looking at factors such as whether the employee has exhausted their sick pay, whether the employer needed to call on temporary staff and the size of the company); the extent to which the employee has been consulted with and his/her views taken into account and whether these views were properly balanced against medical opinion; whether reasonable steps had been taken to discover the employee’s medical condition and likely prognosis; and the length of service. Employers can reasonably request that an Employee provides them with information about the nature and extent of their injury//illness to allow the Employer to ascertain the likely length of any absence, but Employers are recommended to arrange a medical opinion to be sought themselves as well. If you’re disabled, your employer has a legal duty to try to make ‘reasonable adjustments’ to how/where you work and has to take into account the new provisions under the Equality Act 2010.
  • Redundancy – this applies when there is no more, or not enough, work for you and/or others (your employer closes or relocates the business or now needs fewer workers). Your employer needs to be genuinely making redundancies, needs to select those who are at risk of redundancy in a fair way, consider offering you suitable alternative work, consult you properly before making you redundant and pay your Statutory Redundancy Pay entitlement, otherwise without all these steps being taken your redundancy could be seen as an unfair dismissal. See our article here about redundancies and fixed term contracts.
  • You can see details about Redundancy and Insolvency from the governments Insolvency service here.
  • Statutory Restriction – you can be dismissed if continuing to employ you would break the law – e.g. if you’re a driver and you lose your driving licence (your employer would be expected to look for other suitable work for you before dismissing you, if that was possible), or if you lose the legal right to work in the UK – see our guide here.
  • Some Other Substantial Reason (SOSR)– i.e. your employer is in a situation where they have an overwhelming reason to dismiss you (they would be expected to look at any alternatives before dismissing you), e.g. – your imprisonment; an unsolvable personality clash; the business is relocated and they can’t continue to employ you; if you unreasonably refuse to accept a company reorganisation that changes your employment terms (you may be dismissed and re-engaged on new terms); if an employee is dismissed because of safeguarding concerns (of children or vulnerable adults) but there are no other misconduct dismissal grounds; if your fixed-term contract to cover maternity leave is not renewed. In Masini v Compass Group UK & Ireland Ltd in October 2015 an employee was dismissed fairly under SOSR as a client had asked for the employee to be removed from working on their site – the Employer tried to resolve the situation and look for alternative work for Masini; a number of possible jobs were identified but Masini turned them down because they involved extra travel or a drop in status – she was dismissed and an appeal process followed; the Tribunal rejected her claim for unfair dismissal as it felt the employer had done what it could for her. If you are in prison, it may be fair for your employer to dismiss you because of your conduct or because you are unable to perform your job; the Employer would need to consider factors such as the nature of the offence, the length of the sentence, the nature of the employee’s job, the effect of the employee’s absence on the business and any damage to the employer’s reputation – the Employer should carry out an investigation and a fair disciplinary procedure as far as is possible in the employee’s absence (In 2016 a Bakery worker, Joseph Carter, won an employment tribunal claim for unfair dismissal after being sacked for failing to turn up for work because he was in prison. Although the amount he was awarded was minimal (£650) because he had contributed to his own sacking, the appeal judge said the Bakery, Aulds, had made ‘procedural’ flaws in the way they handled the sacking because they had not followed any disciplinary procedures but just terminated his employment because he had ‘frustrated’ his contract.

However, if your employer dismisses you for the following reasons they are automatically unfair (regardless of your length of service) and you may receive compensation at an Employment Tribunal if you make a claim:

  • For following up your legal rights (by i.e. making a claim to an Employment Tribunal) regarding e.g. not receiving a written statement of your terms and conditions of employment, not receiving the National Minimum wage and, since April 2016, by not receiving the National Living Wage.
  • If you or your partner pregnant and take or ask to take time off for antenatal appointments, statutory maternity leave, paternity leave or adoption leave. Since 1st October 2014, if you’re dismissed for exercising your right to take time off work to accompany a pregnant woman to antenatal appointments
  • For exercising your right to take time off for family emergencies,
  • Since 1st December 2014 if you are dismissed for exercising your right to take shared parental leave. Since From 5th April 2015 if you are dismissed for exercising your right to take adoption appointments.
  • If you ask to become a trade union member, or refuse to join a union
  • If you complain about a health and safety problem (you can read more details here) or report wrongdoing at work (called whistle-blowing – click here)
  • For following up your legal rights to use a grievance procedure or disciplinary procedure or your rights under the Working Time Regulations
  • For taking part in official industrial action that lasts less than 12 weeks (if you take part in unofficial industrial or strike action, you can’t claim unfair dismissal)
  • For taking time off for jury service
  • For asking to work flexibly if you have the right to
  • For having been discriminated against on grounds of age, race, sex, disability, sexual orientation or religion or belief – see full details of the Equality Act 2010 here
  • From October 2012 for being put at a disadvantage or being dismissed because of your rights to automatic enrolment in a pension scheme
  • From 25th June 2013, if the reason for your dismissal was your political opinions or affiliations
  • From 1st September 2013 employees will be protected from detriment if they refuse to switch to an Employee-Shareholder contract. If they are dismissed for refusing to agree to become an employee-shareholder they will be automatically unfairly dismissed (so will not need two years service to bring a claim). They also cannot be disciplined or suffer any other detriments, for example a pay cut, for refusing to agree to this contract. Employees who work under Employee-Shareholder contracts will lose their general right to unfair dismissal under this type of contract.
  • From 11th January 2016, for being dismissed or suffering a detriment if working under a Zero-Hours contract and the reason for this dismissal or detriment is that they failed to comply with an exclusivity clause in the contract. More details here.

If you are a Military Reservist you cannot be dismissed solely or mainly on account of any duties they have to undertake – here dismissal would be a criminal offence and protection exists irrespective of whether formal notification of mobilisation has been given to the Employer. At the moment you need 2 years continuous service to be able to claim this but from 1st October 2014 this 2-year service requirement is removed for a military reservist who is dismissed exclusively (or mainly) because he or she is a member of the reserve forces. See more details in our new Guide to Military Reservists here.

If you are dismissed you should first appeal under your employers disciplinary procedures before pursuing a claim at Employment Tribunal. If you make a claim to Employment Tribunal you usually need to do this within 3 months of being dismissed (unless your company’s disciplinary procedures haven’t been finished). https://www.gov.uk/employment-tribunals

Details of changes to Employment Tribunal rules (including fees you may have to pay) are here and our April 2014 update here.

From 2014 Acas will launch an ‘Early Conciliation’ service which will change the way people access the Employment Tribunal system. It will mean that anyone who wants to lodge an employment tribunal claim will have to notify ACAS first and will have up to a month to attempt to resolve the dispute with their Employer (before lodging the claim) with ACAS’s help. If ACAS can’t resolve the matter in this period then their services will remain available right up until the case is heard by an Employment Tribunal. More details about pre-conciliation here.

Employment Tribunals guidance from gov.uk is here and you can start the online application process here.

Compensation for unfair dismissal at Employment Tribunal is meant to put you where you would’ve been financially if you hadn’t been dismissed.

By Mutual Agreement

Your Employment can end by mutual agreement – for more details on pre-termination negotiations and Settlement Agreements (where you are paid compensation for your employment to end if you agree that you cannot pursue a claim through a Tribunal or the Courts against your Employer) read our new Guide here (effective from 29th July 2013). For details about Without Prejudice rules see our Guide here.

Insolvency

Insolvency happens when an Employer has no money to pay the people they owe in full, including their employees, and they have to make arrangements to meet these debts. You can see details about redundancy and insolvency from the government’s Insolvency service here.

There are different types of insolvency. If your employer is a limited company or partnership then Insolvency will be either:

  • Administration
  • Liquidation
  • Receivership
  • Voluntary arrangement with creditors.

If your Employer is an individual then insolvency will mean bankruptcy or a voluntary arrangement with creditors.

Usually, someone is appointed to deal with an official insolvency situation. They will be in charge of the situation and could be called an insolvency practitioner, official receiver, administrator, liquidator, supervisor or trustee. What will insolvency mean for you as an employee?

  • If the insolvency is official and your Employer is trying to sell the business you may wish to carry on working for them (or an official administrator, receiver or liquidator) and your transfer to another company will be covered by TUPE. This does not affect your rights to redundancy pay if the firm closes down later.
  • If the insolvency is not official, your Employer, if he cannot pay you, may be forced to lay you off or put you on short-time working.
  • If the insolvency is official and compulsory and the business cannot be sold then your employment would terminate automatically but you would not be entitled to make a claim for Unfair Dismissal.
  • If the insolvency is voluntary, the liquidator will inform you if your employment may be terminated. If you are dismissed you are redundant and may have a claim for unfair dismissal if the correct redundancy procedure is not followed.

You need to find out if your employer is insolvent or not. If your employer is still trading but you are not getting paid you may be able to complain to an Employment Tribunal that there has been an unlawful deduction from your pay.

As this can be a very complicated situation you can speak to the Government’s Insolvency Service (click here).

What can I claim for if my Employer is officially insolvent?

If your employer is officially insolvent you may be able to claim the following from the National Insurance Fund:

  • Statutory Redundancy Pay (based on a maximum weekly rate of £475, rising to £479 from 6.4.16)
  • Wages/Pay – up to maximum of eight weeks (based on a maximum weekly rate as above)
  • Holiday Pay – up to a maximum of six weeks (based on a maximum weekly rate as above)
  • Compensatory Notice pay – based on one week (after one months service), plus one week per completed year of service (up to maximum of 12 weeks – again subject to maximum weekly rate as above)
  • Unpaid contributions into a pension scheme and maternity pay
  • Some debt to you – including holiday pay and wages – are classed as ‘preferential debts’ when your Employers assets are shared out so should have priority.

From 31st January 2017, employment tribunal claims relating to employees of insolvent company’s, where payments are sought from the National Insurance Fund, such as redundancy payments, will no longer require a fee.

Our Crunch advisors are only able to answer accountancy related questions. If you have an employment question please either leave a comment below or phone the Acas Helpline on 0300 123 110

If you are an Employer and need ongoing professional help with any staff/freelance issue then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.

Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.

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Written by Lesley Furber

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