Protecting your small business while terminating employment
Posted on 8th January 2021 at 18:38
Terminating someone's employment isn't easy. It can have a significant emotional impact, particularly in smaller companies. But businesses also need to make sure they protect themselves legally as well.
Here are our top tips for making the process run smoothly and avoiding any potential lawsuits.
Both the employee and employer are normally entitled to a minimum period of notice on termination of employment. All notice periods should be included in the employee's contract of employment. However, statutory notice periods apply by law.
Employees should be paid their normal pay during their notice period and the notice period still applies during redundancy.
An employment contract can be terminated at any time by the employee and employer, whether it is down to a resignation, redundancy, retirement or dismissal. All notice should be made in writing and detail the date of termination.
Dismissal without notice
The only exception to providing a notice period is when an employer dismisses the employee on grounds of gross misconduct. The employer may dismiss the employee without notice providing that they have followed all the procedures in line with their disciplinary policy.
Gross misconduct applies when the employee has committed a serious act such as violence, theft, physical abuse, a serious breach of health and safety or gross negligence. The employer must provide the employee with a clear reasoning for their termination.
Settlement agreements are becoming a more popular way of terminating a problem employees employment. Employees can access employment law information at any time if they believe that they are being treated unfairly by the employer which can lead to the employer being sued. Settlement agreements can prevent such problems.
There are a few key points that must be followed to make the settlement agreement binding:
The agreement must be writing
The agreement must relate to a complaint or proceeding
The employee must receive advice from an independent adviser such as a Solicitor. The adviser must have insurance or professional indemnity covering the risk of a claim by the employee
The agreement must be signed by the adviser
The agreement must identify all the conditions of the settlement
Employees should be given a reasonable amount of time to consider the settlement; the minimum consideration time is 10 days unless both parties agree otherwise
Settlement agreements are voluntary, and both parties do not have to agree to The agreement can also be negotiated from both sides until both sides are happy to proceed.
A constructive/unfair dismissal occurs when employees claim their working conditions were so intolerable that they were forced to quit, or the employer has breached an express term of the contract.
Employers must comply with employment laws, so they don’t contribute to factors that trigger constructive dismissal claims, and don’t heighten the risk of employee lawsuits. If an employee believes that their resignation counts as constructive/unfair dismissal, they can file. A constructive or unfair dismissal claim can cost a business anything up to £80,541 plus legal fees.
If an employer decides to go down the termination route and the employee hasn’t committed gross misconduct, there are legal and ethical ways to terminate an employee:
Document and revisit performance reviews
Document any issues and actions to be taken
Schedule reviews to see improvements or to demonstrate that no improvements have been made
Ensure the employee is aware of any issues during their notice period
Stick to facts, do not make it about personalities
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