Unless you have fair grounds to dismiss the employee for gross misconduct, the employee will be entitled to be paid for their notice period. The minimum notice you must give is one week for each year of service, capped at 12 weeks, or the contractual notice period if this is greater. If you do not want the employee to work out their notice, you may be able to pay them in lieu of notice. You should take advice before making that decision, because if the contract of employment does not allow you to do this, taking this step could invalidate any restrictive covenants in the contract and leave you exposed.
The employee will also be entitled to be paid in lieu of any accrued but untaken holiday entitlement, calculated to their last day of employment. Care also needs to be taken if the employee is entitled to bonus or commission and this will be governed by what the contract of employment says.
If you are dismissing an employee on grounds of redundancy, then provided the employee has two or more year’s service, you will also have to pay a statutory redundancy payment. This is calculated against a formula based on their age and length of service. There may also be a right to an enhanced redundancy payment if the business has such a scheme in place.
Disclaimer: This information is provided for general guidance only and is not intended to constitute legal advice. You must consult our employment solicitors if you require advice on your situation or circumstances.
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