by Kate Russell

Other forms of termination of contract

There are several other ways of terminating a contract, each of which may be construed as unfair dismissal if you fail to follow the correct procedures or behave appropriately.


Once an employee has resigned and an employer has accepted that resignation, the employee cannot unilaterally withdraw it.

Resignations do not have to be in writing, but it’s good practice to ask the employee to confirm a resignation in writing.

Avoid taking words of resignation spoken in the heat of the moment at face value. Allow time for the employee to calm down.

Do not pressure an employee into resigning as this may amount to an actual dismissal.


B had been given a disciplinary warning. She was subsequently summoned to another meeting to review her performance. MHS said that, if there were any further incidents of misconduct or poor performance, she would be dismissed. The employer pointed out that it would not be in her interests to have a dismissal on her CV and offered her the opportunity to resign on favourable terms. The employee subsequently resigned and brought a claim of constructive unfair dismissal in the employment tribunal. The EAT upheld the employee’s appeal and found that, in the circumstances, the suggestion that the employee resign was clearly a ‘vote of no confidence’ in the employee.

Mutual agreement

The mutual consent of both parties can bring an employment contract to an end without there being a dismissal in law.

Tread very carefully here as tribunals are very wary of accepting this option and will expect to see clear evidence that the agreement was in fact mutual.


An employment contract may be frustrated where some event occurs which was not envisaged by the parties at the time the contract was entered into, and which makes the contract impossible to perform or radically different from that originally contemplated. Frustration will automatically end the contract. There’s no dismissal and so no need for notice to be given by either party.

Note that tribunals are extremely reluctant to find that a contract has been frustrated.

Apart from death (of employer or employee), the following are examples of situations which could lead to discharge of an employment contract by frustration:

  • Illness (although this will normally have to be long and serious to result in frustration of the contract)
  • Imprisonment (although this will normally have to be long in relation to the employee’s length of service to result in frustration of the contract)
  • Internment
  • A change in the law.

Where prison is concerned, staff sentenced to relatively short terms may be able to argue that there is no frustration if the employment contract allows for other absences of a similar duration, such as for long-term sickness. Where an employee has been bailed, this will not necessarily amount to a frustrating event – it is the conviction that is important.

Where illness is concerned, it must be a really serious condition (permanent incapacity) with no prospect of recovery.

There is no dismissal if an employment comes to an end by reason of frustration of contract and hence the ex-employee can have neither a right to unfair dismissal compensation nor to redundancy pay (subject to the statutory exception for redundancy pay if the contract has been ‘frustrated’ by the death of the employer).