How Is a Contract of Employment Terminated? What to Do and When

A contract of employment can be brought to an end in several ways: an employee resigning, the employer dismissing them, redundancy, the expiry of a fixed-term contract, or both sides agreeing to part. Each route has its own rules on notice and, where the employer ends it, on fairness. Ending a contract in the wrong way can lead to a claim for unfair or wrongful dismissal, so the process matters as much as the decision.

What are the main ways an employment contract ends?

The most common are:

• Resignation, the employee chooses to leave, giving the notice required by their contract
• Dismissal, the employer ends the contract, which must be for a fair reason and follow a fair process
• Redundancy, a form of dismissal where the role is no longer needed, with its own consultation and payment rules
• Mutual agreement, both sides agree to end the contract, often recorded in a settlement agreement
• Expiry of a fixed term, the contract ends on its agreed date, though this can still count as a dismissal in law

How much notice must be given?

Notice is set by the contract, but cannot be less than the statutory minimum. An employee with one month’s service or more must give at least one week’s notice. An employer must give at least one week for each complete year of service, up to a maximum of twelve weeks. Many contracts provide for longer notice, and a payment in lieu of notice may be possible where the contract allows.

When is a dismissal fair?

To dismiss fairly, an employer needs a potentially fair reason, such as conduct, capability, redundancy, a legal restriction, or another substantial reason, and must act reasonably, following a fair procedure. That usually means investigating, holding a meeting, allowing the employee to be accompanied, and offering a right of appeal. The Acas Code of Practice should be followed in conduct and capability cases.

Who can claim unfair dismissal?

At present, an employee generally needs two years’ continuous service to claim ordinary unfair dismissal. This is changing: under the Employment Rights Act 2025, the qualifying period reduces to six months from 1 January 2027. Some dismissals, for example for pregnancy, whistleblowing or asserting a statutory right, are automatically unfair and need no qualifying period at all.

What is the difference from wrongful dismissal?

Unfair dismissal is about whether the reason and process were fair. Wrongful dismissal is a contract claim, usually that the employer failed to give proper notice or breached the contract in dismissing. The two are different, and a dismissal can be wrongful, unfair, or both. Our unfair and wrongful dismissal page explains how we can help.

Getting advice

Whether you are facing dismissal or want to understand your position before resigning, early advice helps you avoid costly mistakes. See our workplace issues service, or request a callback to speak with our employment team.