Terminating an Employment Contract

Do you need to dismiss an employee? Do you want to know how to dismiss or fire an employee lawfully? Are you unsure whether your reason for dismissing an employee is valid? Do you want to know the right way to dismiss an employee? In this article we will cover all of this and more by addressing the following requirements:


1. Fair reason for dismissal

2. Fair Procedure

3. Reasonable dismissal

4. Contractual Obligations



Before you dismiss an employee, you must ensure that:


  1. you have a valid reason for dismissing the employee,

  2. you follow a full and fair procedure in accordance with the ACAS Code of Practice on disciplinary and grievance procedures and

  3. your decision to dismiss is as fair as possible, consistent and well-balanced.


Failing to do so may lead to a claim for unfair dismissal, wrongful dismissal, or discrimination. Dismissal needs to be fair and lawful.


To avoid being taken to court by your ex-employee, you should consider the following information.


1. Is the reason for dismissal fair?


Fair reasons for dismissal consist of the following.


Capability or qualifications: poor performance, incompetence, ill-health, and lack of requisite qualifications are fair reasons for dismissal.


Redundancy – when the job is no longer needed. This encompasses reasons such as a reduced need for employees, the business closing or the workplace closing. This is particularly relevant in the Covid-19 climate.


Conduct: This can relate to one specific act of misconduct or a series of less serious acts of misconduct.


Illegality: Where continuing to employ the employee would be considered a contravention of a statutory restriction. Examples include, where the employee no longer holds a legal right to work in the UK or a lorry driver who loses his driving licence.


Some Other Substantial Reason (SOSR): This is an umbrella or catch-all category of potentially fair reasons that do not fall under the other categories. This can include the end of a fixed-term contract, an employee who is dismissed for refusing to agree to new terms and conditions of employment or for example where a client refuses to work with an employee (often referred to as “third party pressure”) Determining what can be a substantial reason can be subjective. Therefore, the employer should take extra care when using an SOSR for dismissal.


It is important to always bear in mind that a dismissal for any other reason would be unfair.

An employee with 2 or more years of continuous employment can bring a claim for unfair dismissal.


2. Have I followed a fair procedure?


You must follow a fair procedure when dismissing an employee. Please see the ACAS Code of Practice on Disciplinary and Grievance Procedures.


Where there is a disciplinary hearing the employee has a statutory right to be accompanied by one individual either a colleague or a trade union representative.

Regardless of the reason for dismissal the employer must still follow a fair procedure.


To ensure a fair procedure, you must provide the employee with the following:

  • Reasonable information as to the reasons for their potential dismissal;

  • A reasonable time period to consider the information and

  • An opportunity to respond at a hearing/ meeting prior to the employer reaching its final decision.

It is not uncommon for the employer to provide a right of appeal.


3. Is there a reasonable basis for dismissing the employee?


When dismissing an employee, whilst the reason for dismissal may potentially be reasonable, the employer must show that they had a valid reason for dismissing the employee and that they acted reasonably. For example, if the employee was not meeting task deadlines it is best practice for the employer to give the employee another opportunity to meet the deadline whilst providing the employee with as much assistance as possible.


When determining if the employer has a reasonable basis for dismissing the employee, factors such as the company’s resources and the size of the company are taken into consideration by the Employment tribunal.


4. Have I considered my contractual obligations as an employer?


In most cases when the employer terminates the employment the soon to be ex-employee will be provided with a notice period or payment in lieu of notice.

Employers must ensure that, unless a notice period is specified in the contract of employment, the notice period is reasonable and complies with the statutory minimum notice period. The notice period must always be the statutory minimum notice period or more depending on the contract of employment.


Statutory Notice

· I month to 2 years – the minimum notice is 1 week

· 2 to 12 years – the minimum notice is 1 week for each year you have worked

· 12 years or more – the minimum notice is 12 weeks.


If the contract of employment specifies that the notice must be provided in writing, then the employer must give notice in writing. If you are dismissing an employee who is pregnant or on maternity leave, you must put the reasons for their dismissal in writing regardless of how long you have employed them.


Where the employee’s contract of employment provides for a different amount of notice this is called “contractual notice”.


Where the employee is found guilty of gross misconduct or a repudiatory breach of contract, they can be fired on the spot and are not entitled to a notice period or payment in lieu of notice.


Where the employee has a fixed term contract they cannot be dismissed prior to the end of the contract unless there is a clause in the contract of employment allowing for early termination or notice.


An employee who is not provided with sufficient notice can bring a wrongful dismissal claim against the employer. If the employee is successful in their wrongful dismissal claim they are entitled to the wages and benefits that they would have received for their notice period or for the duration of the specified term.


Always Remember – You must follow a full and fair procedure in accordance with the ACAS Code of Practice on disciplinary and grievance procedures. Click here for further information.


How can Pure Business Law help?


We are specialist fixed fee Employment Law Solicitors based in Bedford and operating nationally. We have specialist expertise in employment matters; we draft, review, and advise on