Termination of Contracts

The final role of the H.R.M. department is to make the termination of the employees’ contracts
of employment as smooth and efficient as possible. There are a number of different ways in
which employees can have their contracts of employment terminated, including:

1. Redundancy. It will be necessary at certain times (e.g. during a recession, or a decline in the
industry) for a business to ‘downsize’ its workforce (make a certain proportion of them
redundant).

This process could be done in several ways, voluntary redundancy (where workers opt for a
redundancy package), compulsory redundancy, ‘last-in-first-out’ (where the most recent
appointments are the first to be made redundant), or retention by merit (where the least
effective employees are made redundant).

2. Retirement. At the end of their working-life, employees

will wish to retire and stop offering their services to the
business. In return, they will often receive a lump-sum
payout, as well as both their state pension and their private
pension.

3. Transfers and Resignation. This occurs when an

employee leaves the business and transfers their services
to another business (the employee may apply for a more
senior job at another business).

4. Dismissal. This is where the employee is deemed to have

broken their contract of employment, and told that their
services are no longer required by the business. Fair dismissal
can be on the grounds of sexual harassment, racial
harassment, bad timekeeping, sleeping on the job, and
destruction of business property.

However, if an employee feels that they have been unfairly

dismissed (e.g. on the grounds of pregnancy, ethnic
background, or union membership), they can apply to have the
case heard at an industrial tribunal.

This is a small court that deals with claims of unfair dismissal and discrimination from
employees against their (former) employers. If the employee is successful in claiming that they
have been unfairly dismissed, then they are eligible for re-instatement in their previous job, as
well as a financial award (to cover loss of earnings, and pain and suffering).