Employment Terminations in the US and UK: Significant Differences Across the Pond

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While some similarities exist between US and UK employment laws, there are fundamental differences that global employers need to be aware of when considering terminating an employee.

In a recent XpertHR webinar, Philadelphia employment attorney Jonathan A. Segal, who heads the Duane Morris Institute, and London employment attorney Jon Heuvel, of Pennington Manches, discussed key elements of the employment termination process in both countries.

Here are four main differences Segal and Heuvel addressed during the webinar:

1.       For Cause

Segal discussed the firmly rooted at-will principle in the US, i.e., an employer can terminate an employee without cause at any time for any reason, so long as it is not an illegal reason. However, there are three exceptions to the at-will principle:

 

  • If cause is required by employment contract;
  • If the employee is subject to a collective bargaining agreement stating that the employee cannot be terminated without cause following a probationary period; and
  • If the employer has created an inadvertent agreement, e.g. making statements of job security.

Segal cautioned that despite the at-will principle, US employers should still have cause to terminate because that would provide an employer with a defense in the event the employee files a discrimination action. Essentially, even though an employer can terminate at-will, Segal warned it should not terminate “at whim.”

On the flipside, UK employers need cause to terminate an employee, which must be based on:

  • Conduct;
  • Capability;
  • Redundancy;
  • Breach of duty; or
  • Some other substantial reason.

Employees have a statutory right to be protected from unfair dismissal. Heuvel said one could argue that during the first two years of employment a UK employee is employed at-will. However, he noted that even before the two-year anniversary, employees can still bring an unfair dismissal claim against an employer for various reasons, including that the termination was related to his or her trade union membership or certain whistleblower activity.

2.       Notice

Another stark contrast between the US and the UK is that with the exception of mass layoffs, employment agreements or handbooks providing greater rights, US employers generally are not required to provide notice to an employee prior to terminating his or her employment.

In addition, even if a company asks an employee to provide a certain amount of notice prior to leaving his or her job, the employee cannot be forced to work during the notice period. However, US employers do have the right to say that if an employee does not work during the notice period, he or she could lose certain benefits not otherwise protected by law, such as paid time off. Ironically, Segal remarked that if an employer gives an employee notice of poor performance, this provides a window of opportunity for an employee to file a retaliation claim in the event he or she is terminated.

Unlike the US, UK employers must give notice to their employees prior to termination. Because UK employees have a contract of employment, those contracts contain an express notice period. So even if it is not in writing, an employee is still entitled to the minimum amount of notice required by statute, which depends on the employee’s length of service.

UK employers also cannot require employees to work during their notice period. However, employers do have legal recourse and could file a breach of contract lawsuit seeking damages for losses suffered due to the employee’s early departure. For instance, an employer could seek damages for the loss of a major deal or the cost to hire a replacement.

3.       Protected Status

The US and the UK do provide similar protections for employees based on certain characteristics, such as gender, pregnancy, race, religion and disability. However, one difference involves protections for individuals based on sexual orientation and gender identity. In the UK employees are protected, but in the US that is not necessarily the case. Segal acknowledged that while there is no federal statute on point, the Equal Employment Opportunity Commission (EEOC) has taken the position that Title VII does provide protection. In addition, at least 22 states and over 100 local jurisdictions extend protections based on those characteristics.

Another notable difference is that while both countries prohibit age discrimination, US federal law only protects individuals who are 40 years old or older. In the UK, however, any employee who has been treated differently because of his or her age is protected.

4.       Severance

Segal noted that when there is an individual termination of an employee who is 40 or older, employers must give the employee 21 days to consider the severance agreement and seven days to revoke. He added that the timing differs for group terminations and there are also some state law differences. In contrast, UK law offers no mandatory timeframe that must be given to an employee to consider a severance agreement.

Finally, if a US employer includes a nondisparagement clause in its severance agreement it could be attacked by the National Labor Relations Board (NLRB) on the grounds that it prevents employees from engaging in protected concerted activity. The EEOC has aligned with the NLRB on this issue. Segal mentioned that a nondefamation clause is held to a higher standard and less likely to be challenged.

Meanwhile, in the UK, a nondisparagement clause is ok. In fact, if a UK employee disparages an employer that would be considered cause that would invite a warning and, if continued, termination of the employee.

For more insights on the employment termination process in both countries, listen to our free XpertHR webinar below.

XpertHR-Webinar-US-vs-UK-Terminations

 

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