Knowledge from Crunch - love accounting

How your employment can come to an end – for employees

Posted by Lesley Furber on Apr 15th, 2019 | Employment law

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

If you’re a freelancer/contractor, check out our article on what rights you have if your client cancels your contract here.

This article covers

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

You or your employer can give notice to end your employment if you’re a permanent employee (you can find more information on probationary periods in our “Probationary period myths dispelled” article).

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’ve been employed on very short fixed-term contracts of under one month which have been extended (each time for under one month), you’ll be entitled to one week’s notice once you’ve been continuously employed for three months.

Your employer can, however, end your contract without notice if your conduct justifies it. This is known as ‘gross misconduct, which we’ll be covering in a little more detail later.

However, your contract may specify longer periods of notice that you’d need to give if you are resigning, or your employer would need to give you if they were dismissing you. You may be able to agree with your employer that you can give less notice than you should (but they do not have to agree to this) but your employer has to give you the minimum legal minimum notice periods (above). In addition, your employer may contractually require you to accept a payment in lieu of working the full notice period, if they require this.

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; generally they won’t though but they do not need to pay if you refuse to work your full notice period.

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 your notice period. An employer could also sue an 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 leave without giving your full notice period.

Back to top

If you’re dismissed without being given the proper notice required 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.

However, if you’re calculating your service to make an Employment Tribunal claim (for unfair dismissal for example), your employment is treated as having ended on the day you were dismissed (i.e. if you are making a Tribunal claim you normally have to do this within three months of the event, so you need to include your notice period within this three month time limit).

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.

Back to top

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 Retirement here.

Back to top

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 doesn’t have to give you notice of this expiry date, as the contract automatically expires.

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 mentioned above).

If you don’t have a notice period in your Fixed Term contract and it’s 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 two 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 (as this is effectively a dismissal).

If you’re unhappy about your contract ending and not being renewed, then you should have the right to ask for an appeal under your employer’s dismissal procedure.

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

Back to top

You may feel that you have no choice, because of the way your employer is treating you, that you are being forced to resign. This is called constructive dismissal.

There are several reasons why you may decide to terminate your employment and claim constructive dismissal, including:

  • 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 will have been no actual dismissal, your employers treatment of you is sufficiently bad that you are entitled to regard yourself as having been dismissed.

In September 2013 – in 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 five to three a week without consulting her. This meant she qualified for maternity allowance only not Statutory Maternity Pay (SMP). She put in a grievance which was rejected. She then resigned and later put in an appeal against the grievance decision but she 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.

However, 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. 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.

Employees shouldn’t leave too much time between the employer’s breach of contract and your resignation – if you do you may be deemed to have accepted or waived that breach.

There is no time period laid down in law – it depends on all the circumstances. You can resign by giving notice (you do not have to walk out immediately) but ideally the notice you give should be no longer than your normal contractual notice, as this is likely to invalidate your claim (as you have affirmed the contract by staying working for the Employer for a long period). Similarly, if you are on sick leave and feel you are in a constructive dismissal situation you should not accept sick pay over a long period of time before resigning. Also, the employee’s personal circumstances may dictate how long the employees needs to make up their mind to resign (sole family earner, likely re-employment prospects etc.).

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.

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).

Back to top

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

If you have been employed continuously by your employer for two years, you have a right to request a written statement explaining why you’ve been dismissed and whether you’ve received notice or not. Regardless of the reason for your dismissal, your employer must act fairly in the procedure they follow to dismiss you.

There are five potentially fair reasons for an employer to dismiss you.

Poor conduct

You break a term of your employment – e.g. behaviour that is thought to be unacceptable. This can include:

  • 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 so bad they are called gross misconduct, e.g. behaviours such as theft and violence, 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 Company, as each organisation will have its own take on what gross misconduct means, depending on the business and other factors.

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

This is when 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, or 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 they have 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’re dismissed on the grounds of incapacity (for health reasons), your employer must have 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/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 for a medical opinion to be sought 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 (where for example 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 any suitable alternative work, consult you properly before making you redundant and pay you your Statutory Redundancy Pay entitlement. Without all these steps being taken, your redundancy could be seen as an unfair dismissal. See our detailed article here about redundancies.

Redundancy Guide - find out what you should do

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.

Some Other Substantial Reason (SOSR)

You can be dismissed in this way if your employer is in a situation where they have an overwhelming reason to dismiss you (they would be expected to look at any alternatives to dismissing you beforehand, e.g. moving you to a new job if possible etc.), such as:

  • 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.

Back to top

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. Check out our guide for more information about continuous service.

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 take or ask to take time off for antenatal appointments, statutory maternity leave, paternity leave or adoption leave
  • 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
  • For exercising your right to take shared parental leave
  • 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 or report wrongdoing at work (called whistle-blowing)
  • 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 do so
  • 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
  • For being put at a disadvantage or being dismissed because of your rights to automatic enrolment in a pension scheme
  • For your political opinions or affiliation
  • For being dismissed or suffering a detriment if working under a zero hours contract that contains an exclusivity clause in the contract.

If you’re a Military Reservist you cannot be dismissed solely or mainly on account of any duties you 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. Before 1st October 2014 you needed two years continuous service to be able to claim unfair dismissal but from 1st October 2014 this two 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.

What to do if you’re dismissed

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 three months of being dismissed (unless your company’s disciplinary procedures hasn’t been finished).

In 2014, ACAS launched an ‘Early Conciliation’ service which changed the way people access the Employment Tribunal system. Anyone who wants to lodge an employment tribunal claim must now notify ACAS and they 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, their services will remain available right up until the case is heard by an Employment Tribunal.

You can read more details about ACAS conciliation here and the Employment Tribunals guidance from gov.uk is here and you can start the online application process here.

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

Back to top

Your employment can end by mutual agreement, but obviously, this is when both parties are happy to end the employment relationship. Check out our “Pre-termination negotiations and settlement agreements” and “‘Without Prejudice’ rules explained (and how they relate to Settlement Agreements)” articles for more information.

Back to top

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 find more information about redundancy and insolvency from the government’s insolvency service.

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’ll be in charge of the situation and could be called an insolvency practitioner, official receiver, administrator, liquidator, supervisor or trustee. There are a number of things insolvency can 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 doesn’t affect your rights to redundancy pay if the firm closes down later
  • If the insolvency is not official, your employer, if they 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 can’t be sold, 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’re dismissed, you’ve been made 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 aren’t getting paid, you may be able to complain to an Employment Tribunal that there has been an unlawful deduction from your pay. In such situations, it’s often best to speak to the government’s insolvency service.

Back to top

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 £525, from 6th April 2019)
  • 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.

Since 31st January 2017, employment tribunal claims relating to employees of insolvent companies, where payments are sought from the National Insurance Fund, such as redundancy payments, 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.

Don’t have time to read this right now? Download our jargon-free PDF Redundancy Guide to keep and read later.

Redundancy Guide - get yours for free!

Build your own online accountancy package

Join 11,000 clients who trust our advice, support, and leading accountancy software for their business. Choose exactly what accountancy support you need with our new tool and get a quote in 60 seconds.

Join Crunch Chorus:
The free community for the self-employed

You'll get access to a range of benefits, such as invoice software, jargon-free business guides, great networking opportunities, discounts, plus much more

Useful tools and resources

Business guides

From understanding expenses to starting a limited company, we've a range of jargon-free business guides for you to download and keep.

Invoicing software and templates

Create, send and store sole trader invoices in a snap with our free invoice software. You can also download a selection of invoice templates for all business types.

Take-home pay calculator

Use our Take-Home Pay Calculator to work out your true earnings and see if you could save money with a different company set up.

Need help with your accountancy?

Join 11,000 clients who trust our advice, support, and leading accountancy software for their business. All the support and advice you need, wherever you need it. Speak to an expert today on 0333 311 0800 to find out more about our bespoke packages.

    Find out more