When does an employment relationship really come to an end?

When is the end the end with employment relationships? This might sound like a silly question, but it can often be unclear when an employment relationship has ended and there have been many cases where employers and employees have argued about the actual date that a dismissal took effect. 

This point comes to the fore the most when employees are trying to establish that they have sufficient service to bring an unfair dismissal claim or are entitled to a redundancy payment (both of which require two years' continuous service) or whether they have brought their employment tribunal claim in time.

Statutory and contractual notice

The requirement to give notice is usually set out in the contract of employment and a failure to give the correct notice is likely to be a breach of contract giving rise to a wrongful dismissal claim. The usual remedy for this is damages amounting to the pay the employee would have received had they been given their correct contractual notice.

In addition to contractual notice, section 86 Employment Rights Act (ERA) imposes a statutory obligation on an employer to give an employee a minimum amount of notice to terminate their employment and this overrides anything in the contract which tries to give shorter notice. Statutory notice is one week for each complete year of service up to a maximum of 12 weeks. 

In some situations the notice period may be different to what is stated in the contract or provided for under the ERA, for example an employer and an employee can mutually agree a shorter notice period, in cases of summary dismissal (where an employee is dismissed for gross misconduct) no notice is required and an employee can resign with immediate effect if they considered their employer to be in serious breach of their contract of employment. Be careful though as an employee's date of dismissal will not necessarily change just because they are told that they do not need to work during their notice period, there has to be a clear mutual agreement that the notice is being cut short.

On occasion the date of dismissal under the contract and the EDT for statutory purposes can be different if the terms of the contract require the dismissal to be communicated or actioned in a particular way and that has not been done. Also, other than in cases of summary dismissal, the EDT can be extended for certain purposes if the employer has not given the full statutory minimum notice such as calculating the qualifying period for unfair dismissal and a basic award.

Notice is not effective until it is effectively communicated to the employee and with a definite end date

Unless stated otherwise in the contract of employment, notice can be given in writing or orally and could even be by text message, instant messaging or by e-mail. However, there is scope to argue that notice given by such means has not been received and therefore many employers prefer to hand a termination letter to their employee in person to avoid any confusion as to when notice was received.

Sometimes, it is not possible to give notice to an employee in person and you have to rely upon some other means of giving notice, but employers must be aware that sometimes "other means" can cause arguments as to when it has been effectively communicated. 

For example, posting a letter confirming dismissal can leave doubt as to when the notice has been effectively communicated.  Notice only starts to run when the letter is received and read by the employee (or they have had a reasonable opportunity to do so).  Therefore, if there are delays due to postal strikes or where a letter is sent special delivery and there is a delay in the employee picking the letter up from the postal depot or even if the employee is on holiday away from home, there can be a question mark over when notice has been given and therefore when the employment relationship has come to an end.

Notice should be clear and unambiguous 

Both parties must understand that the employment relationship is ending and when, in other words notice must state the termination date (which is always preferable) or at least the facts from which that date can be ascertained or inferred.

So, what can we take from this.

  • In order to avoid arguments as to when an employee's employment has ended always consider whether there are any particular terms in the contract of employment that need to be followed to effect their dismissal.
  • Consider carefully how you are going to make the employee aware of the decision to dismiss them, the best option being to tell them in person with a clear record, such as a recording of the hearing (and of course follow this up in writing). 
  • Take extra care when terminating an employee's employment in situations where they may have close to two years' service or qualify for a generous benefit if they are dismissed at a later point.
  • In situations where an employee is resigning, there is no legal requirement for you to accept their resignation, but you should write to them confirming the last day of their employment.