How to terminate employment

Termination of employment is never easy and an area most employers find difficult to handle.  Businesses of all sizes and types use us as a sounding board to avoid mistakes before ending staff employment.

Complications can arise where the employee is a senior employee, a director or shareholder. We have many years of experience in dealing with these types of issues.

Risk of employment law claims

The main risks with getting termination wrong centre around making an error in complying with your own contract, proceeding in a procedurally unfair way and/or discrimination based claims. Another common problem area is assuming, when terminating a contract which isn’t, on the face of it a contract of employment or specifically says that it isn’t when in fact, the relationship is found to be an employment relationship.

We mitigate the risks by analysing the following:

Grounds for ending the employment

The reason determines the employer’s procedure and the employee’s contractual payment entitlements. Broadly reasons are:

Gross misconduct – gross misconduct dismissals can be instant. Employers must have evidence they followed a fair procedure. Typically, this includes an investigation and disciplinary hearing.  Employers should plan on employees appealing the disciplinary hearing outcome.

Poor performance – in practice, poor performance is unlikely to constitute gross misconduct. Employers must go through a capability procedure. To avoid claims, this procedure must be correctly executed. In practice, employers often compromise the employee out of the business, and offer a settlement agreement.  We often advise on the amount to offer in the settlement agreement.

Redundancy –  Employers often worry about how quickly they can fairly deal with the process given that paperwork and evidence of fair selection must be prepared and applied. For clients, we prepare the appropriate paperwork. Note, employees have no right to appeal a redundancy decision, unless the employment documentation includes this right.

Discrimination claims post employment

An employee faced with dismissal may claim discrimination. Most employees know that if their discrimination claim succeeds, their compensation is potentially uncapped. In addition, they may gain an award for injury to feelings.

Some claims are genuine. Many employees claim once they know their employment is terminated. Often employees allege discrimination as part of an attempt to increase their employment termination package. Usually, a robust defence quickly ends the claim. If the employee persists then the law around the burden of proof, if applied tactically, often helps employers.


An employee might claim their employment was terminated as a result of a protected disclosure, i.e. a whistle-blowing claim.

Whistleblowing allegations are common in financial services and the public sector. Even if the claim is not genuine, employers must respond.

Settlement agreement and payment

Most employers avoid devoting the management time to fighting a case in the Employment Tribunal. A sensible settlement agreement depends on what an Employment Tribunal or Court would award the employee.  We use the following factors to formulate an offer:


Does the employee have on-going losses?

The maximum award for on-going losses usually covers 24 months.

Does the employee have 2 years continuous service?

If not, then the employer’s exposure may only be the notice period.

Does the employee hold company shares?

Termination of the employment contract might trigger a compulsory sale of shares. Then, termination requires planning. For instance, consider who will purchase the shares, at what price.

Employment lawyer advice?

If you need advice on a termination of employment issue please do call or email. We offer highly practical, highly experienced legal advice which always focuses on costs/risk/benefit from your perspective.


Alex Kleanthous

A highly experienced, tactically astute yet practical litigation lawyer, Alex has 30 years experience in resolving disputes.

Let us take it from here

Call us on 020 7438 1060 or complete the form and one of our team will be in touch.