Terminating an employment relationship – how not to do it.

Vishal Garg, CEO of the US mortgage company, Better.com, has been widely criticised for reportedly using the platform to terminate the employment of 900 employees at the same time over Zoom. In the footage of the call which has been circulated on social media, Garg is heard saying: “I come to you with not great news…If you’re on this call, you are part of the unlucky group being laid off. Your employment here is terminated effective immediately”.

This is a fine example of how not to do it. Whilst not necessarily unlawful in the US – employers in most US states have the ability to terminate an employment relationship without notice and without cause – it would almost certainly give rise to an expensive group action in a UK Employment Tribunal, if handled that way in England.

Employees in England and Wales have both contractual and statutory rights. The most common rights that would come into play in this scenario would be (a) the contractual right to have one’s contract terminated in accordance with its provisions; (b) the statutory right not to be unfairly dismissed; and (c) the right to receive a statutory redundancy payment.

As a general rule, an employee who has been continuously employed for two years or more has the right not to be unfairly dismissed. Any dismissal will be unfair unless:

1. an employer can show that the reason (or principal reason) for the dismissal was for one of five potentially fair reasons – capability; conduct; redundancy; breach of statutory duty; or some other substantial reason; and
2. in all the circumstances, the Tribunal considers the employer acted reasonably in treating that reason as a sufficient reason for dismissal, i.e. by following a fair process prior to any termination.

Collective consultation obligations are also required if an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a 90-day period.

In summary, whether you are proposing to dismiss 1 or 1,000 employees, it is important to ensure you are doing so for a fair reason, acting reasonably in the process, and complying with the employees’ contractual and statutory rights. Whilst Zoom may have made the impossible possible in many ways since the start of the pandemic, it will not always be the most appropriate platform to use.

If you need any advice on terminating an employment relationship or would like our help in guiding you through the process, do give our Employment Team a call on 0208 290 0440.