It is an unfortunate part of the employee lifecycle but, at some point, a business may need to terminate an employee’s contract. Unlike when an employee resigns and works their notice period, a contract termination is a decision often taken by a senior manager on behalf of the business.
Common reasons for terminating employment include:
- poor performance not meeting targets
- misconduct, and
Each of these can be challenging and require a compliant and best practice-led process.
One of the common mistakes we see, often around poor performance, is employers choosing to have frank discussions with employees with the intention of reaching a mutual decision for the employee’s exit, without the need to follow due process. Employers are often led into a false sense of security when they have good relationships with their teams, or they think the evidence is strong enough that the employee should not complain. However, regardless of how great the relationship may be or how confident the employer is that the employee will be reasonable and understanding, you must follow UK legal employment practices.
In comparison to the US, the employment culture in the UK is not driven by financial settlements. Even the offer of a separation agreement (known as a settlement agreement in the UK) where a monetary incentive is offered at termination, must follow due process to be compliant and enforceable.
Terminating an employee with a frank discussion as opposed to following the due process opens you up to the risk of litigation through an employment tribunal claim. UK employees expect to be treated fairly and for the proper procedures to be followed. If they are not, damages awarded by the employment tribunal in a claim can be increased by up to 25 per cent.
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Our Foreign Direct Investment team knows how critical it is to get expansion plans right first time. We can provide expert advice to ensure you have the right long-term solution.
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