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, came to work last Monday morning 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 its 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 until 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.

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’s. This way remaining staff feel clear about the issues and can discuss any further issues they may have. It also builds trust through honesty and respect. Management and the bosses should remember that the employee has a right to privacy, so keep the information simple but clear.

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.