How Should Employers Handle Contract Terminations & Redundancies – Case Study

Terminating a contract or making redundancies are never easy. There is however a correct and proper way to make these difficult decisions. Your employer has a duty to deal with any issues you may have within the company. Leading insolvency firm MGJL have suggested; If you are struggling, extra training and help should be applied.


Staff at the SES Multi Metal Stock LTD plant in Caldershaw, for example, came to work one day in 2016 only to find the keys for the locks no longer worked, window shutters down and all access into the building blocked. When enquiring to the boss about the issue, the staff received text messages informing them all that they had been made redundant.

The message read; I am sorry it leaves you all without a job. You will obviously be due redundancy. An administrator will be appointed in the next couple of days and they will be in touch with you. I am so sorry it’s come to this. I don’t know what to say, I am gutted it’s collapsed.

The message came as a shock to the employers, of which Pete Donnelly, a driver with the company for 14 years; “I’m in shock and have just been trying to sort things out – I’ve got a mortgage and kids and we’ve no idea where we stand.

It wasn’t until the staff at SES rang the boss ten times that they received an answer. Owner Cameron Elliot blamed the problem on a failed deal with an investor that was due to be concluded over the weekend, consequently injecting money into the company.

This begs the question, what is the correct way to terminate a contract or to announce redundancies? Terminating a contract is something no one enjoys. It should therefore be made with bravery and honour. This was certainly not the case with Cameron Elliot. If a termination is made, it shouldn’t come as a surprise to the employee. This is because the necessary steps should have been made previously that indicated that a person is underperforming. In this instance, the employer should have searched for redundancy advice prior to leaving these employees with nothing more than a note on the door.

A good employer should always communicate with an employee if their job is at risk. If a job role has disappeared, every effort should be made to transfer the employee to a new, suitable role. If an employee is underperforming, a performance review should be arranged. The comments heard in a performance review should be recorded formally, and achievable targets agreed upon. Meaningful support should then be given to the employee to help them achieve these targets, and progress should be recorded clearly. If an employee and an employer disagree over the progress the employee is making, another senior employee should be asked to attend a further performance review to give another point of view. Communication is key, and only when all avenues have been exhausted should termination of the contract be considered.

Silence from management creates a vacuum of uncertainty and fear amongst existing staff. Terminations should address the root situation (the employee whose contract is to be terminated) and then approach the remaining staff to explain the reasoning. This will ensure that the reason for the termination is communicated properly to the employee, otherwise, the company could be subjected to lawsuits for wrongful termination. Additionally, providing an explanation with respect and honesty helps to foster trust between management and employees, while still maintaining the employee’s right to privacy.

Communication is the key. If you are fearing the sack, then you should speak with your senior as soon as possible. By discussing any issues, you may have you give your employers the chance to communicate and concerns or steps that you can make to improve. In the case of the SES Multi Metal Stock LTD, more honesty should be of been passed on to the employees, they should be aware of the health of the company and they should be rewarded with loyalty. It is unfortunate to see redundancies and terminations, however if they should occur strong communication and honest goes a long way to repay your employees for their efforts.