An employment relationship can come to an end in several different ways in England and Wales, and the method matters, because it affects notice, pay, and whether the employee can claim unfair or wrongful dismissal. Here is a plain-English guide to the main routes.
1. Resignation (by the employee)
The employee chooses to leave, giving the notice required by their contract (or the statutory minimum). A resignation should be clear; an employer should be cautious about treating ambiguous "heat of the moment" words as a resignation.
Constructive dismissal: if the employee resigns in response to a serious breach by the employer (e.g. not being paid, or a fundamental breakdown of trust), they may claim constructive (unfair) dismissal, treated in law as a dismissal by the employer.
2. Dismissal with notice (by the employer)
The employer ends the employment giving the contractual or statutory notice (whichever is longer). To avoid an unfair dismissal claim, the employer needs a fair reason (conduct, capability, redundancy, statutory restriction, or some other substantial reason) and a fair procedure. Note that most ordinary unfair dismissal claims require two years' continuous service; some claims (such as automatically unfair and discrimination-based dismissals) have no qualifying period.
3. Summary dismissal (dismissal without notice)
Dismissal without notice is lawful at common law where the employee has committed a repudiatory breach of contract, commonly described in employment practice as gross misconduct (e.g. theft, violence, serious breach). If there is no such justification, dismissing without notice is a wrongful dismissal (breach of contract), and may also be unfair if the process was not fair.
4. Mutual agreement / settlement agreement
The parties can agree to end the employment on agreed terms. To validly waive statutory claims (like unfair dismissal), this must usually be done through a settlement agreement that meets statutory conditions, in particular, the employee must take independent legal advice. Settlement agreements often involve a termination payment.
5. Expiry of a fixed-term contract
A fixed-term contract ends on its agreed end date. Importantly, non-renewal of a fixed-term contract is still a "dismissal" in law, so the employee may claim unfair dismissal (subject to qualifying conditions) if it is not handled fairly. Fixed-term employees are also protected from less favourable treatment than comparable permanent staff.
6. Redundancy
Where the job disappears (business closure, workplace closure, or reduced need for that kind of work), dismissal may be by reason of redundancy, a potentially fair reason, but the employer must use fair selection, consult (collective consultation rules apply for larger-scale redundancies), and pay statutory (or enhanced) redundancy pay to those with the qualifying service.
7. Retirement
There is no longer a default retirement age, so simply dismissing someone because they have reached a certain age is age discrimination unless objectively justified. Retirement should generally be a voluntary decision by the employee.
8. Frustration
Rarely, a contract may end automatically by frustration, where something beyond the parties' control makes performance impossible (e.g. long-term incapacitating illness or imprisonment). This is narrowly applied.
Whatever the route: get the exit right
- Give the correct notice (or pay in lieu).
- Pay all that is owed (final wages, accrued holiday, any redundancy) with correct tax treatment.
- Follow a fair process to reduce the risk of claims.
- Use a settlement agreement (with independent advice) where you want a clean break and waiver of claims.
Key takeaways
- Employment can end by resignation (watch constructive dismissal), dismissal with notice, summary dismissal (only for repudiatory breach, commonly gross misconduct), mutual agreement/settlement agreement, expiry of a fixed term, redundancy, retirement (must avoid age discrimination), or frustration.
- Non-renewal of a fixed-term contract is a dismissal in law.
- A valid waiver of statutory claims generally needs a settlement agreement with independent legal advice.
- Whatever the route, give correct notice, pay what's owed, and follow a fair process.
Sources
- Employment Rights Act 1996 (notice; dismissal; unfair dismissal; redundancy; settlement agreement conditions)
- Equality Act 2010 (age discrimination and retirement); Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002
- Common law on wrongful dismissal, constructive dismissal and frustration of contract
--- This article is general information about the law of England & Wales as at 2026, not legal advice. For advice on your circumstances, consult a qualified solicitor.