The relationship between employer and employee is, at its root, a contractual one – with the contract of employment at its base. You might think that ending the relationship simply involves ‘ending’ the contract. However, the law recognises several different ways in which a contract of employment can come to an end – and each comes with different legal consequences.

  1. Dismissal

This occurs where the employer brings the employment contract to an end. If the employee has over two years’ service, they may claim unfair dismissal if the employer didn’t have a fair reason or follow a fair process.

  1. Resignation 

This happens where the employee ends the contract voluntarily, usually with notice. But even a resignation can give rise to claims if the employee feels forced out (see below).

  1. Constructive dismissal

This happens when the employee resigns in response to the employer’s serious breach of contract – for example, cutting their pay or changing their hours without agreement.

  1. Frustration 

This happens rarely. The contract terminates because something happens that makes it impossible for the contract to continue. This ends the contract automatically, without action from either side.

  1. Termination by mutual agreement

This can happen, for example, via a settlement agreement, where both parties agree to part ways on specific terms.

Understanding the difference between these forms of termination is key to managing risk and supporting fair outcomes. Get it wrong, and the consequences can be costly.

Speak to Jon Dunkley

Jon is a Partner at Wollens and can advise you. Contact Jon via email jon.dunkley@wollens.co.uk or call 01271 341021.

Jon Dunkley - Wollens Solicitors Devon

You can also complete an online enquiry form. One of the Wollens team will contact you as soon as they are available.