Employment Contracts

by Kate Russell

Termination of employment

Either party – employer or employee – can terminate the contract of employment without notice if the conduct of the other justifies it.

Notice of termination of employment

Under the legislation, both employer and employee are normally entitled to a minimum period of notice of termination of employment. After one month’s employment, an employee must give you at least one week’s notice. Unless the contract provides for the employee to give longer notice with increasing service, the minimum notice to be given by the employee will remain a week.

You must give an employee at least one week’s notice after one month’s employment, two weeks after two years, three weeks after three years and so on up to 12 weeks after 12 years or more. You may both be entitled to a longer period of notice than the statutory minimum if this is provided for in the contract of employment.

Most employees, subject to certain conditions, are entitled to receive payment during the statutory notice period.

Employers or employees can waive their rights to notice or to a payment in lieu of notice.

Right to a redundancy payment

Redundancy is a dismissal caused by an employer’s need to cut jobs, restructure the organisation, move the place of work or close down completely.

To qualify for a redundancy payment, an individual must meet certain criteria. He must be an employee and must have been dismissed, and he must have at least two years’ continuous service on the date on which notice expires or, if termination is without notice, the date on which termination takes effect.

Statutory redundancy pay is calculated using the following formula.

  • For all completed years worked between the ages of 18 and 22, he will receive 0.5 week’s pay.
  • For all completed years worked between the ages of 22 and 41, he will receive 1 week’s pay.
  • For all completed years worked between the ages of 41 and 64, he will receive 1.5 week’s pay.

From October 2006, years worked before the age of 18 and after the age of 65 will be counted for the purposes of redundancy pay calculation.

This is up to a maximum of 20 years’ service and a pay ceiling. This statutory level is set annually. For current rates see Statutory rates.

Unfair dismissal

Employees have the right not to be unfairly dismissed. If an employee thinks he has been unfairly dismissed, either for an unfair reason or for a reason which is connected with procedural unfairness, he has the right to complain to an employment tribunal.

Generally, employees must have at least two years’ continuous service in order to be able to make a complaint of unfair dismissal to an employment tribunal.

The two-year qualifying period does not always apply. There is no service requirement if an employee is dismissed for any of the reasons listed below.

  • A reason which is unlawful under race, sex or disability discrimination legislation
  • Trade union membership or activities or non-membership of a trade union
  • Seeking to assert a statutory employment right
  • Taking certain specified types of action on health and safety grounds
  • Pregnancy or any reason connected with maternity
  • Refusing or proposing to refuse to do shop work or betting work on a Sunday
  • Acting as a representative for consultation about redundancy or business transfer, or as a candidate to be a representative of this kind, or taking part in the election of such a representative
  • Performing, or proposing to perform, any duties relevant to an employee’s role as an employee occupational pension scheme trustee
  • Qualifying for working families’ tax credit or disabled person’s tax credit; or seeking to enforce a right to them (or because the employer was prosecuted or fined as a result of such action)
  • Taking, or seeking to take, parental leave
  • Taking, or seeking to take, time off for dependants
  • Taking lawfully organised official industrial action lasting eight weeks or less
  • On grounds related to trade union recognition procedures
  • Qualifying for the national minimum wage or seeking to enforce a right to it (or because the employer was prosecuted as the result of enforcement action taken by the employee)
  • Exercising rights under the working time regulations 1998
  • Making a protected disclosure within the meaning of the Public Interest Disclosure Act 1998
  • Exercising or seeking to exercise the right to be accompanied at a disciplinary or grievance hearing, or to accompany a fellow worker
  • On grounds related to the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000

Written reasons for dismissal

Employees who have been dismissed and have completed at least two years’ continuous employment before the effective date of termination can request a written statement of reasons for dismissal within 14 days of the request. Compensation is payable if the employer fails to respond.

An employee who is dismissed during her pregnancy or maternity leave is entitled to a written statement of the reasons, regardless of her length of service and regardless of whether or not she has requested it.