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Termination of Employment
A contract of employment may be terminated in several ways, some of which may give rise to legal claims against the employer. Therefore, the reason why and the way in which a contract is terminated are of paramount importance. An employer owes its employees certain obligations in respect of the manner in which it terminates their employment.
Wrongful dismissal
A wrongful dismissal arises when an employer terminates an employee's contract in a manner that is in breach of the terms of the employee's contract of employment. For instance, the employer terminates the contract without giving the employee the necessary period of notice or failing to make a payment in lieu of notice (if the option to pay in lieu of notice is specified in the employee's contract).
Unfair dismissal
Unfair dismissal arises where an employer dismisses an employee for a reason which is not considered to be a fair reason legally. There are six reasons which are considered to be fair reasons to dismiss an employee. These reasons relate to:
- capability or qualifications of the employee;
- conduct of the employee;
- redundancy;
- retirement;
- the contravention of a duty or restriction imposed by or under an enactment; or
- some other substantial reason.
An employee who has been continuously employed for at least one year has a legal right not to be unfairly dismissed. In certain circumstances, an employee has a legal right not to be unfairly dismissed even when such an employee has not been employed for a continuous period of one year. Such circumstances include termination for reasons connected with pregnancy or childbirth; health and safety reasons; and membership or participation in trade union activities.
Dismissals are automatically unfair if they relate to the employee's pregnancy; certain health and safety matters; membership of a trade union and participation in trade union activities.
Although an employer may establish a fair reason for dismissal, it is also important that the dismissal is carried out fairly, in that a proper procedure is followed.
An employee who has been unfairly dismissed must generally bring a complaint before an employment tribunal within three months of the dismissal.