Resignation is where an employee decides to terminate a contract by resigning in a similar way
to an employer terminating a contract by dismissal. Resignation and dismissal are unilateral
decisions. In other words, they are taken exclusively by one party: the employee in the case of
resignation, and the employer in the case of a dismissal.
It is usual for a resignation to be in the form of a resignation letter, although there are times
when a resignation may be verbal and sometimes in the heat of the moment. It is possible for
verbal resignations to be withdrawn as long as it is done so very quickly.
It is a good idea to find out early on the reason for the resignation, particularly where you want
to retain the employee. It may be possible to prevent the resignation by changing terms and
conditions egg working hours, responsibilities etc.
It is good practice to acknowledge a resignation in writing on its receipt. This is a good
opportunity to confirm the employee’s notice period, and the expected last day of work, as well
as reminding him or her of any particularly relevant terms and conditions, such as
confidentiality, that continue to apply.
If an employee holds a position with regular contact with clients or access to business-sensitive
information, and they are leaving to work for a competitor, it is good practice (if the contract
allows this) to either:
remove the employee from that role to work their notice elsewhere in the organisation
send them home on “garden leave” for the duration of their notice period.
Exit interviews
It is good practice to carry out an exit interview with all leavers to establish the reason behind
their resignation. In order to gain the most out of such interviews it is better for a neutral person
to conduct the interview, e.g. a Trustee or someone other than the line manager.
Constructive dismissal
If the employee can show that the employer has breached the contract, and he or she was
“forced” to resign as a result of that breach, this is known as constructive dismissal.
In order to claim constructive dismissal, an employee must show that four requirements have
been met:
1. The employer must have breached a fundamental term of the contract or indicated that
such a breach was going to happen. The breach can be of an express or implied term, for
example unilaterally changing terms and conditions of employment such as hours of work or
pay, or failing to protect an employee from harassment in the workplace.
2. The breach must be serious enough to repudiate the contract.
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3. The employee must leave the employment quickly after the breach, because any delay
would suggest that the breach wasn’t so bad after all, and that the employee had accepted
4. The reason the employee gives for leaving must be in response to the employer’s conduct.
In cases of constructive dismissal the employee would usually leave immediately and not work
their notice period.
In order for the employee to take their claim of Constructive dismissal to an Employment
Tribunal, they must have followed step one of the Statutory Grievance Procedure i.e. made a
formal grievance in writing to their employer and waited 28 days for a response.
Notice periods
The contract of employment usually states the required notice period in the event of
resignation. The Employment Rights Act 1996 (ERA) states that any employee who has at least
one month’s continuity of employment must not give less than one week’s notice. In practice it
is difficult to enforce such notice periods although an employer could pursue a breach of
contract claim through the courts. In order to be successful the employer has to substantiate a
loss that resulted from the employee’s failure to honour his or her notice period. A loss can be
either difficult to establish or just not cost-effective to pursue.
Garden leave
If an employer decides that it does not want the employee to work his or her period of notice, a
common approach is to send the employee home on “garden leave” and exclude him or her
from the premises or from having any contact with other employees, customers or suppliers.
During a period of “garden leave” the employee continues to receive all pay and benefits and is
bound by both the express and implied terms of the contract. The contract of employment
should be drafted to expressly provide for the employer to invoke a period of garden leave.
Pay in lieu of notice
Payments in lieu of notice can be used to pay an employee in preference to working his or her
notice period. Any such payment will be taxed in the usual way. If there is no express clause in
the contract, to impose a payment in lieu of notice may be regarded as a breach of contract.
Termination by mutual agreement
Contracts may also be terminated through mutual agreement, i.e. both parties agree to the
contract’s ending and so releasing each other from its obligations. The employee’s consent must
be genuine. It is a good idea to use a compromise agreement signed by both parties to seal
mutual terminations. A binding compromise agreement is essential to prevent employees from
pursuing unfair dismissal or any other claims in tribunal at a later date.
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Giving references
Recent legislative decisions have resulted in a more cautious approach from people giving
references. Generally all data given in a reference should be based on fact or capable of
independent verification. As a guide, references should be fair, accurate and not give a
misleading overall impression of the employee.
Referees should be very cautious about giving any subjective opinion about an individual's
performance, conduct or suitability, which they cannot substantiate with factual evidence.
It is a good idea to have a standard format for references, detailing simple, factual information
e.g. dates of employment, job title, job responsibilities and accountabilities.
Example reference checklist for former employees
Who has the authority to give references – directors/managers/human resources?
How are oral references, if any, to be recorded?
Is there a bare minimum policy/job description, length of service, reason for leaving?
Should more be included – details of abilities, performance, disciplinary record, attendance
record, character strengths?
Is the overall impression accurate, and not misleading or unfair?
Has the employer avoided the inclusion of information that the employee does not know
Has the employer avoided the revelation of spent criminal convictions?
Has the fact that the employee complained about the employer’s discriminatory conduct
been an issue? If so, has the employer avoided victimisation of the employee in the
Is the reference addressed to a named person only, and not ‘to whom it may concern’, and
marked ‘addressee only’? (There is something known as a defence of qualified privilege in
any defamation claim which will not apply if the reference is passed on to someone other
than the addressee.)
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