Terminating a Contract of Employment - What You Need to Know


Terminating an employee's contract is never easy but on some occasions there may be no other alternative. There are certain steps that you should follow. Here's what you need to know about terminating a contract of employment:

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Examples of occasions when a contract of employment might need to be terminated include;

  • Redundancy
  • Breach in organisation’s policy and procedures
  • Poor performance
  • Gross misconduct

When there is no other option but to terminate an employee’s employment it is imperative that the correct process is adhered to. It is crucial that the employee fully understands the reasoning behind why they are being dismissed and that the employer, in turn understands the employee’s rights.

Below highlights processes that aid in the dismissal process.


The use of key performance indicators (KPI’s) in an organisation allows employees to be completely clear on their responsibilities and what is expected of them. In the event that KPI’s are not met them termination may be justifiable on the grounds of capability.

Performance Management Reviews

Performance management reviews are discussions held with each employee at agreed intervals. The review provides an ideal environment to discuss performance. It also allows the employer the opportunity to address any performance issues and provide feedback to encourage the employee to improve or issue warnings should the employee’s performance not improve.

Recommended reading: Telltale Signs of When to Hire and Fire Employees

Reviewing Employment Policies and Procedures

Employers can protect themselves by ensuring that company policies and procedures are reviewed regularly, ensuring that they are up to date with ever changing legislation.

Regular review of policies and procedures also ensures that the company is protected from situations brought on by technological advancements, for example a social media policy. If an employee breaches company policy then dismissal may be justified in certain circumstances.

Training and Education

Every company should put emphasis on training and educating staff. All staff should be aware of how to conduct their tasks correctly and safely, along with what is acceptable behaviour at work. In the event that an employee disregards accepted behaviours, and significant wrongdoing occurs, the employee may be disciplined up to and including summary dismissal

Summary dismissal is when the decision is taken to terminate an employee’s contract without notice due to a clear breach of company policy and procedure which amounts to gross misconduct. Examples of gross misconduct may include theft or bringing the company into disrepute.

When employees have been trained on company policy and procedures, employees have a clear understanding of what constitutes a significant wrong doing.

Recommended reading: Free Online Training: The Many Approaches to Facing Workplace Conflict

Terminating an Employee

Be it a competence, conduct, redundancy, etc. issue that you are facing, if gets to the stage where dismissal may be necessary then there are some general accepted elements that apply to all termination procedures.

The items listed below are to guide you, but you should always seek advice before acting to ensure you are following requirements.

  1. Invite the employee to a formal meeting to discuss the matter. It is always advisable to provide the employee with advance notice in writing of the meeting, clearly setting out what the purpose of the meeting is.
  2. Offer the employee the opportunity to have a representative present with them in the meeting. This may be either a work colleague or Trade Union Representative.
  3. Clearly identify the issues to the employee (be it a conduct issue, potential redundancy, etc.) and allow them to see all evidence that you may have in relation to the matter.
  4. Provide the employee with the opportunity to respond and justify any reason as to why they should retain their employment.

It is imperative that everything is documented during the process, as in the event the employee in question submits an Unfair Dismissal claim then the burden of proof rests with the employer.

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Friday, 15 November 2019
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