What Should Employers Avoid When Ending Employment Contracts?

As an employer, when you employ staff to do a job in your business, you often have an employment contract between you and your employee stating employment terms. This legal agreement sets out your worker’s responsibilities and legal rights in your employment and your legal obligations as an employer. Your employee’s contract may also detail rules concerning ending the employment relationship, such as the notice needed.

There are also legal requirements regarding the termination of employment contracts relating to the notice period and statutory redundancy pay. There are points you should avoid when terminating a contract, such as not having a fair reason or not following a fair procedure which could mean ending the contract will not be a fair dismissal. Ending employment contracts could, therefore, result in an employment tribunal for an employment claim such as unfair or wrongful dismissal. This article will explain some points you should avoid when ending employment contracts in England.

Do Not Get Notice Periods Wrong

When you end your employee’s employment contract through dismissal or redundancy, your employee will typically need to continue working for their notice period before leaving their job. The notice period may vary depending on:

• the length of time they have worked for you; 
• if you are dismissing them or making them redundant; and 
• what you have included in their employment contract.

You must ensure that you avoid getting your employee’s notice period wrong as your employee has legal rights.

Avoid an Unfair Dismissal

If you decide to dismiss an employee, you must ensure that you dismiss them fairly to avoid unfair dismissal. An unfair dismissal claim at an employment tribunal is costly in terms of time, financial compensation and your reputation as an employer. 

There are three main points you must ensure are correct to avoid unfair dismissal, and these are:

• have a valid reason for dismissal;
• ensure you use a fair and reasonable procedure which mirrors the Acas Code of Practice on disciplinary and grievance procedures; and 
• when deciding if dismissal is appropriate, ensure that your decision is balanced, consistent and fair.

Ensure You Do Not Miscalculate Final Pay

When you dismiss an employee or make them redundant, you will still need to pay them at the end of their time working for you. However, the final payment in a job can vary from regular pay. Therefore, you should ensure you do not miscalculate your employee’s final salary when ending employment contracts.

Points you may need to consider when calculating your employee’s final pay causing the payment to differ from their standard wage, are:

• the amount of holiday leave they have taken in their employment with you;
• any redundancy pay; and 
• any money dedicated to training courses.

Before Redundancy, Consider Alternative Employment

When you make redundancies, there are strict procedures you must follow before deciding who will be made redundant. One of these is that you must consider if you can offer your employee alternative employment in your business. Therefore, when you are ending your employment contracts, you must avoid failing to do this.

Ensuring that you consider alternative employment for your employees when carrying out redundancies will require you to:

• identify job roles available in your organisation;
• select if any are suitable for your staff;
• discuss with your staff the suitability of any roles you identify; and 
• offer suitable work to your employees as an alternative to redundancy.

Key Takeaways

Whether you end your employment contracts with your staff by dismissing them or making redundancies, there are points and actions you must avoid as part of the process. For example, you must avoid unfair dismissal. This means that you must follow a fair and reasonable procedure when you dismiss your staff. Furthermore, you must have a valid reason for their dismissal and ensure your decision is balanced, consistent and fair. It is also essential to avoid a miscalculating your employee’s final pay and ensure that you detail payments and decisions clearly with reasons in their last pay slip. 

If you need help understanding what to avoid when ending employment contracts in England, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.

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