United Kingdom — Termination & Severance

The Employment Rights Act 1996 (ERA 1996) establishes the statutory right not to be unfairly dismissed and is the principal framework governing dismissal protection in the United Kingdom. Part X of the Act sets out the core protections, procedural requirements, and remedies available to employees who are dismissed.

The right and qualifying period

Section 94 of the ERA 1996 provides that "an employee has the right not to be unfairly dismissed by his employer." However, this right is subject to a qualifying period of continuous employment. Under Section 108(1), as amended in 2012, an employee must have been "continuously employed for a period of not less than two years ending with the effective date of termination" to bring an ordinary unfair dismissal claim. The two-year threshold was introduced by The Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 (S.I. 2012/989), which took effect on 6 April 2012; prior to that date, the qualifying period was one year.

Automatically unfair dismissals: no qualifying period

Section 108(3) carves out significant exceptions to the two-year rule. Employees may bring unfair dismissal claims from day one of employment if the dismissal is for certain protected reasons, including:

• Pregnancy, maternity, and family leave — dismissal connected with pregnancy, childbirth, or the exercise of maternity, paternity, adoption, or parental leave rights (Section 99);
• Health and safety — dismissal for carrying out health and safety activities or raising health and safety concerns (Section 100);
• Asserting statutory rights — dismissal for asserting a statutory employment right, such as the right to the national minimum wage, working time protections, or written particulars of employment (Section 104);
• Whistleblowing (protected disclosures) — dismissal for making a protected disclosure under the Public Interest Disclosure Act 1998 framework (Section 103A);
• Trade union membership or activities — dismissal related to trade union membership, activities, or the exercise of collective bargaining rights, as specified in Sections 152 and 153 of the Trade Union and Labour Relations (Consolidation) Act 1992, which are cross-referenced in Section 98(6) of the ERA 1996.

These automatically unfair categories do not require any minimum service period.

Fair reasons for dismissal

Where the two-year qualifying period is met (and no automatically unfair ground applies), the employer bears the burden of showing both a potentially fair reason for dismissal and that it acted reasonably. Section 98(1) requires the employer to establish that the reason for dismissal falls within one of the following categories set out in Section 98(2):

• (a) Capability or qualifications — relating to the employee's skill, aptitude, health, or any other physical or mental quality for performing the work (Section 98(3) defines "capability" and "qualifications");
• (b) Conduct — misconduct, gross misconduct, or other behavioral grounds;
• (c) Redundancy — the employer's need for employees to do work of a particular kind has ceased or diminished;
• (d) Statutory restriction — continued employment would contravene a duty or restriction imposed by law (for example, loss of a required license or work authorization); or
• (e) Some other substantial reason (SOSR) — a catch-all category for reasons not falling within the four enumerated grounds but still justifying dismissal, such as business reorganizations or third-party pressure.

The reasonableness test

Even where a fair reason exists, Section 98(4) imposes a second hurdle: the employer must have acted reasonably in treating that reason as sufficient to justify dismissal. The tribunal assesses "whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably," and the determination "shall be determined in accordance with equity and the substantial merits of the case."

This reasonableness inquiry is fact-specific and evaluates both substantive fairness (whether dismissal was an appropriate response) and procedural fairness (whether the employer conducted an adequate investigation, gave the employee notice of the allegations and an opportunity to respond, and allowed the employee to be accompanied at a disciplinary hearing). Case law interpreting Section 98(4) has established the "band of reasonable responses" test, under which a tribunal asks whether the employer's decision to dismiss fell within the range of responses that a reasonable employer might have adopted, rather than substituting the tribunal's own view for that of the employer.

Enforcement

Section 111 provides that an employee may present a complaint of unfair dismissal to an employment tribunal. The complaint must ordinarily be presented within three months of the effective date of termination, though the tribunal has discretion to extend time if it was not reasonably practicable to present the claim in time.

Source: Employment Rights Act 1996, Section 94 Source: Employment Rights Act 1996, Section 98 Source: Employment Rights Act 1996, Section 108 Source: The Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 (S.I. 2012/989)

Section 86 of the Employment Rights Act 1996 (ERA 1996) establishes the statutory minimum notice periods that employers and employees must give to terminate a contract of employment. These minimums apply automatically to all employees with the requisite service, regardless of what the employment contract says; contractual notice provisions may provide longer periods but cannot reduce notice below the statutory floor.

Employer's minimum notice obligation

Under Section 86(1), an employer must provide the following minimum notice to terminate the employment of a person who has been continuously employed for one month or more:

• (a) One month to less than two years' continuous employment: at least one week's notice.
• (b) Two years or more of continuous employment: at least one week's notice for each complete year of continuous employment, up to a maximum of twelve weeks' notice.

The twelve-week cap applies once an employee reaches twelve years of service; an employee with fifteen, twenty, or thirty years of service is still entitled to only twelve weeks' statutory notice (though many contracts provide longer notice for senior or long-serving employees).

Practical example: An employee with seven years and three months of continuous service is entitled to seven weeks' statutory notice (complete years only count). An employee with eleven months' service is entitled to one week. An employee with twenty years' service is entitled to twelve weeks.

Employee's minimum notice obligation

Section 86(2) imposes a reciprocal—but much shorter—notice obligation on employees. An employee who has been continuously employed for one month or more must give at least one week's notice to resign. This one-week minimum does not increase with length of service; even an employee with twenty years' service owes only one week's statutory notice to the employer (though again, the contract may—and often does—require longer notice, particularly for professional, managerial, and senior roles).

Relationship to contractual notice

If the employment contract specifies a longer notice period than the statutory minimum, the contractual period governs. For example, if an employee's contract provides for three months' notice but the employee has only four years of service (yielding four weeks' statutory notice), the employer must give the full three months' contractual notice. Conversely, if the contract specifies only two weeks' notice but the employee has accumulated ten years of service (yielding ten weeks' statutory notice), the statutory ten weeks overrides the contractual two weeks. The principle is straightforward: whichever is longer applies.

Employers cannot contract out of Section 86; any clause purporting to reduce notice below the statutory minimum for an employee who qualifies is void to that extent.

Gross misconduct exception: summary dismissal

Section 86(6) provides that "This section does not affect any right of either party to a contract of employment to treat the contract as terminable without notice by reason of the conduct of the other party." In other words, if an employee commits a repudiatory breach—typically gross misconduct such as theft, fraud, violence, or serious insubordination—the employer retains the common-law right to dismiss summarily (with immediate effect and no notice or pay in lieu). When an employer lawfully exercises this right, the statutory notice entitlements under Section 86(1) do not apply, and the employee cannot claim wrongful dismissal for the lost notice period.

The question whether conduct was sufficiently serious to justify summary dismissal is a matter of contract and common law, not statute; the burden is on the employer to show that the employee's conduct amounted to a fundamental breach. If a tribunal or court later finds that the alleged misconduct did not justify summary dismissal, the dismissal will be wrongful (a breach-of-contract claim for the notice pay) and may also be unfair (if the employee has two years' qualifying service and no automatically unfair ground applies).

One-month qualifying period and continuous employment

Both the employer's and the employee's statutory notice obligations are triggered once the employee has been continuously employed for one month. "Continuous employment" is defined and calculated under Part XIV of the ERA 1996 (Sections 210–219); breaks in service and the treatment of temporary cessations, strikes, and absences are governed by those provisions. An employee dismissed with less than one month's service has no statutory notice entitlement under Section 86 (though the common law would generally require "reasonable" notice, which in practice for very short service may be only a day or a few days, and the contractual notice provisions—if any—may still apply).

Pay and rights during statutory notice

Sections 87 to 91 of the ERA 1996 confer specific pay rights on employees during the statutory notice period, including an entitlement to full pay (not merely statutory sick pay or no pay) if the employee is incapable of work due to sickness or injury during the notice period, provided that the contractual notice period is no more than the statutory minimum. (If the contractual notice exceeds the statutory minimum by at least one week, Sections 87–91 do not apply and the employee's contractual sick-pay entitlements govern instead.) Annual leave continues to accrue during the notice period under the Working Time Regulations 1998, and untaken holiday must be paid out at termination or, at the employer's election, may be required to be taken during the notice period (subject to proper counter-notice).

Claims for breach: wrongful dismissal

Failure to give the statutory (or contractual) minimum notice gives rise to a wrongful dismissal claim, which is a common-law breach-of-contract action. The claim may be brought in the employment tribunal (if the claim is for £25,000 or less) or in the civil courts. The measure of damages is the pay and benefits the employee would have received during the notice period. Wrongful dismissal is distinct from unfair dismissal (a statutory claim under Part X of the ERA 1996 that requires two years' qualifying service for ordinary claims and evaluates the substantive reason and procedural fairness of the dismissal); an employee may have both a wrongful-dismissal claim (lack of notice) and an unfair-dismissal claim (inadequate reason or procedure) arising from the same termination.

Source: Employment Rights Act 1996, Section 86 Source: Employment Rights Act 1996, Section 87

Part XI of the Employment Rights Act 1996 establishes a statutory redundancy payment scheme that entitles qualifying employees to a lump-sum payment when they are dismissed by reason of redundancy. The payment is mandatory for employers and is calculated by a formula that takes account of the employee's age, length of service, and weekly pay. Section 135(1) provides that "an employee has the right to a redundancy payment from his employer if the employee ... (a) is dismissed by the employer by reason of redundancy."

Two-year qualifying period and employee status

Section 155 of the ERA 1996 imposes a minimum continuous-employment threshold: "An employee does not have any right to a redundancy payment unless he has been continuously employed for a period of not less than two years ending with the relevant date." Only employees (as opposed to workers or self-employed contractors) qualify for statutory redundancy pay; the concept of "continuous employment" is defined and calculated under Part XIV of the ERA 1996 (Sections 210–219), with rules governing breaks in service, transfers of undertakings, strikes, and absences.

The two-year threshold is a hard floor and applies regardless of the employee's age, the size of the employer, or the sector of employment. An employee made redundant one day before completing two years' service has no statutory entitlement.

The calculation formula: age bands and service

Section 162(1) sets out the statutory calculation method. The employer must:

• (a) Determine the period of continuous employment ending with the relevant date (ordinarily the date on which notice expires or, if the dismissal was without notice, the date the termination took effect; Section 145 defines "the relevant date" for redundancy-payment purposes);
• (b) Reckon backwards from the end of that period the number of complete years of employment; and
• (c) Allow the appropriate amount for each of those years of employment.

Age-banded multipliers

Section 162(2) defines "the appropriate amount" for each complete year of service according to the employee's age during that year:

• 1.5 weeks' pay for each year of employment in which the employee was aged 41 or over;
• 1 week's pay for each year of employment in which the employee was aged 22 to 40 (inclusive); and
• 0.5 weeks' pay for each year of employment in which the employee was aged under 22.

Prior to October 2006, the upper-age multiplier applied to years worked at age 41 or above and a lower-age band applied to employees under 18; the Employment Equality (Age) Regulations 2006 (S.I. 2006/1031) removed the upper age limit for claiming redundancy pay and simplified the age structure, but the three-tier age-banded calculation remains in force.

Twenty-year cap on service

Section 162(3) provides: "Where twenty years of employment have been reckoned under subsection (1), no account shall be taken under that subsection of any year of employment earlier than those twenty years." The statutory redundancy payment is therefore based on a maximum of 20 complete years of service, even if the employee has been continuously employed for 30, 40, or more years. Continuous employment prior to the most recent 20 years is ignored for the calculation, though it may still count for other purposes (e.g., establishing continuity or avoiding a break in service).

Weekly pay cap and maximum payment

"A week's pay" for redundancy-payment purposes is calculated under Sections 221–229 of the ERA 1996 and is subject to a statutory cap that is uprated annually on 6 April each year. For dismissals on or after 6 April 2026, the weekly pay cap is £751. (For dismissals before that date, lower figures applied; the cap was £700 from April 2025 to April 2026, and the Government indexes the figure annually in line with the September Retail Prices Index.) The weekly pay used in the calculation is capped at this amount, regardless of the employee's actual earnings.

The maximum statutory redundancy payment as of 6 April 2026 is therefore £22,530, representing the sum payable to an employee aged 41 or over at the relevant date with 20 complete years of service at the maximum weekly rate: 20 years × 1.5 weeks × £751 = £22,530.

Employers may—and often do—offer enhanced (contractual) redundancy payments that exceed the statutory minimum, either by using actual weekly pay without the cap, by applying a multiplier to the statutory figure, by disregarding the 20-year service cap, or by paying an additional ex-gratia sum. The statutory payment is a floor; contractual terms or collective agreements can be more generous but cannot reduce the employee's entitlement below the statutory amount.

No reduction for gross misconduct when redundancy is the reason

Where an employer dismisses for redundancy, the employee's entitlement to statutory redundancy pay is not reduced or lost by reason of conduct occurring during the notice period, except in the narrow circumstances addressed by Sections 140 to 143 of the ERA 1996 (which permit disentitlement or reduction if the employee commits an act during notice that would itself justify summary dismissal on gross-misconduct grounds and the employer invokes the specific statutory procedures). In the ordinary case, however, an employer cannot avoid paying statutory redundancy by asserting that the employee committed misconduct after being given notice of redundancy.

Contractual offset and unfair-dismissal interaction

Section 122(4) of the ERA 1996 provides that if an employee receives a statutory redundancy payment and also succeeds in an unfair-dismissal claim, the unfair-dismissal basic award is reduced by the amount of the redundancy payment already received (or, if a contractual payment exceeding the statutory amount was made, by the contractual amount). This prevents double recovery for the same period of service. The compensatory award for unfair dismissal may also be reduced by any contractual redundancy payment in excess of the statutory minimum, at the tribunal's discretion.

Written statement of calculation

Section 165(1) requires: "On making any redundancy payment, otherwise than in pursuance of a decision of a tribunal which specifies the amount of the payment to be made, the employer shall give to the employee a written statement indicating how the amount of the payment has been calculated." Failure to provide the written breakdown is a criminal offence (fine not exceeding level 1 on the standard scale under subsection (2)), and the employee may serve written notice on the employer requiring a statement within not less than one week (subsection (3)).

Claiming the payment and time limits

Section 164(1) provides that an employee has no right to a redundancy payment unless, before the end of six months beginning with the relevant date, the employee has either (a) made a claim in writing to the employer, (b) agreed with the employer the amount or entitlement, (c) referred the question to an employment tribunal, or (d) presented a complaint of unfair dismissal under Section 111. Section 164(2) grants the tribunal discretion to extend the deadline by a further six months (up to 12 months in total from the relevant date) if it is "just and equitable" to do so. After 12 months, the right to statutory redundancy pay is ordinarily lost.

If the employer is insolvent and unable to pay, the employee may claim the statutory redundancy payment from the National Insurance Fund (Redundancy Payments Service) under Section 166.

Source: Employment Rights Act 1996, Section 135 Source: Employment Rights Act 1996, Section 155 Source: Employment Rights Act 1996, Section 162 Source: Employment Rights Act 1996, Section 165 Source: GOV.UK Redundancy Pay Guidance