The exit management process may vary as a Contract of Employment will commonly come to an end following

  • Termination by the Employer (Dismissal)
  • Termination by the Employee (Resignation)
  • By mutual agreement or contractual provision between the Employer and the Employee

There are also a number of less common situations where the contract ends automatically including where performance of the contract is impossible for example due to serious illness (Frustration of contract)

1) Dismissals

Dismissal can be with or without notice but must be for one of the following principal reasons to be fair

  • The CONDUCT of the employee
  • The CAPABILITY of the employee
  • REDUNDANCY
  • ILLEGALITY
  • SOME OTHER SUBSTANTIAL REASON such as to justify the dismissal

All dismissals must satisfy the test within the legislation which is

Where the employer has fulfilled the requirement (to show that the reason used is one of those above), the determination of the question whether the dismissal is fair or unfair, having regard to the reason shown by the employer, depends on;

Whether, in the circumstances (including the size and administrative resources of the employer’s undertaking), the employer acted reasonably in treating it as a sufficient reason for dismissing the employee and;

Shall be determined in accordance with equity and the substantial merits of the case;

This means that an employer must ensure that both the main reason for the dismissal and the procedural methods used to implement the dismissal will need to be demonstrably fair before an Employment Tribunal claim can be defended.

2) Resignations

Resignations from employees can also be given with or without notice and employees will not be in breach of their contracts if they resign without notice where they allege that they have been constructively dismissed.

All resignations should ideally be received by employers in written form as difficulties may arise where verbal notification only exists. This is particularly true where resignations are given in the heat of the moment following disagreements that may have arisen. It is always the case that the employer is expected take those steps necessary to ensure that they are as certain as they can be that the resignation is unambiguous on the part of the employee.

The question of whether notice will be worked should also be confirmed in written form to avoid unnecessary confusion at a later date. Verbal agreements only are likely to go against an employer in the absence of an unambiguous agreement in relation to notice. Attention should also be given to the contractual provisions that the employer has in place in relation to garden leave, pay in lieu of notice and other associated issues that may apply on resignation or indeed dismissal.

3) Mutual agreements

Mutual agreements to terminate a contract are not as commonplace as other methods but still meet the needs of the parties to a contract. There is therefore no dismissal in these circumstances and employees will not be entitled to bring claims for unfair or wrongful dismissal. Typical examples will include voluntary early retirement arrangements and financial severance packages.

Many such situations result in the production of a legally binding agreement, known as a Settlement Agreement. Although the employer may be satisfied that a severance payment accepted by an employee will be sufficient there are many examples where this has not prevented successful Employment Tribunal claims.

Considerations when the employee leaves the business

When an employee leaves a business either through their own choice or that of their employer, it is important to consider many aspects that are often forgotten including conducting an exit interview, cancelling credit cards, deactivating passwords, and managing conversations regarding ongoing confidentiality.

When an employee leaves the business, an employer might mistakenly think that their obligations towards a former employee have ceased.  In many instances they may be right in their thinking; however, work related reference requests will almost certainly be received.

Knowing how to approach issues that may present themselves after an employee has left your employment is important as your legal liability will not end just because the employment relationship has. 

Exit Management Guide

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