Shortening the Notice Period of an Employee who has Resigned: What Should Employers Consider?

In the recent case of Mr M Fentem v Outform EMEA Limited, the Employment Appeals Tribunal (EAT) upheld the decision that shortening Mr Fentem's notice period by paying salary in lieu, following his notice of resignation, did not amount to a dismissal by the employer.

Mr Fentem, an employee of Outform EMEA Limited, notified his employer of his resignation in April 2019, giving nine months’ notice in accordance with his employment contract. In December 2019, Outform EMEA Limited relied on a clause in Mr Fentem’s contract to terminate his contract early by paying salary in lieu to cover the rest of his notice period.

The clause stated that ‘at any time during the period of notice be entitled to terminate the employee’s employment forthwith’. Mr Fentem made a claim for unfair dismissal and the ET had to decide whether the employer’s termination of his contract was a dismissal or a resignation.

As Mr Fentem had given notice of resignation and his employment contract contained a clause that permitted Outform EMEA Limited to terminate his contract early by making payment for the remainder of the notice period, this did not mean that the employee had been dismissed.  The date of which his resignation takes effect had only been altered, and so the employees claim for unfair dismissal was dismissed.  

This case highlights the importance of paying close attention to the terms and conditions that are contained within employees’ contracts of employment. If an employer would like the freedom to end an employees notice period early once an employee has resigned, they must include the appropriate provisions in the employment contract to allow them to terminate the contract early by paying salary in lieu. Making the decision to terminate a contract where an employee has resigned, before the notice period has expired, may result in employers facing claims for unfair dismissal.

Review your employees’ contracts of employments regularly and update them to ensure your business is protected.  If you are in need of support or advice with your employees contracts of employment contact us today, we will be happy to help.

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