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PortugalRecruitment and Selection
How does HR manage the termination of an employee’s contract
The contract termination must be managed along with the offboarding of the employee. Don't know which steps to follow? We explain them in the blog!
Marcos Lopez
HR Consultant
17 of March, 2025
A relatively common procedure in any company is the termination of employment contracts. This is usually the responsibility of the legal department, but HR also intervenes in this process.
Both onboarding and offboarding are one of those matters where HR managers join efforts with another team in the company.
What is contract termination
The contract termination implies putting in writing the end of the contractual relationship between two or more parties. In this case, between the company and the worker.
Spanish legislation indicates multiple reasons for terminating a contract of employment. Some can be voluntary, others not.
It is regulated by the Workers’ Statute. Article 49.1 of the same establishes the minimums that must be met, including the 15-day notice period.
As is common, what is stated in the Workers’ Statute can be modified by the collective agreement. It will be necessary to adhere to what it indicates.
Any party can terminate the contract, both the company and the worker. In both cases, the 15-day notice -or the one established by the agreement- is non-negotiable.
The exception occurs when the company adds up an unfair dismissal or in the trial period of the contract.
The role of HR in the termination of the contract begins much earlier. In a way, this is conditioned by the type of contract and the situation of the worker. Even so, let’s see how HR proceeds in the termination of an employment contract.
Termination of employment contracts step by step
To be able to terminate a contract of employment, it is necessary to analyze the reasons for the contract termination. It can be an end of employment contract, voluntary dismissal, have reasons for it…
Both Human Resources and the legal department must know the motivation for the end of the contract. Then we start to act.
The next step will be to know if there is agreement between the parties. The ideal would be that the termination is by mutual agreement. For example, retirement or an end of contract.
In these cases, HR will need to have a replacement prepared. The fact that there is a prior agreement will prevent us from having legal problems in the future.
When there is no agreement, for example, because the worker does not share the decision or the severance pay, they can sign in disagreement. We cannot lose sight of the path that the decision takes.
Our third step will be to communicate the contract termination effectively. This will be one of the most important tasks of Human Resources. On the one hand, it must comply with the 15 days’ notice.
On the other hand, it may have to put out fires if the decision causes discomfort in the staff.
The departure of a colleague can affect the work environment. HR must do everything possible so that this does not happen. The decision must be communicated correctly. We also have to manage the new situation when the employee announces their departure.
Finally, we will proceed to the final settlement. It is a key step, among other things because it includes the severance pay.
In it, we will include the outstanding salary until the contract ends, but also the overtime or holidays not enjoyed. Also commissions, bonuses or other concepts.
What causes justify the end of the employment contract?
There are numerous reasons that can justify a contract termination. HR must gather data that justify them, especially when the termination is the result of a disciplinary matter. These are the main causes of termination of an employment contract:
- Mutual agreement between the company and the worker.
- Resignation or resignation of the worker.
- End of contract.
- Retirement or retirement.
- Any valid reason included in the employment contract.
- Total, partial disability, invalidity or death of the worker.
- Extinguishing of the legal personality of the company or organization.
- Reasons of force majeure.
- Own will of the employee due to non-compliance by the company.
- Dismissal, collective or individual.
To these causes are added the dismissals, objective or disciplinary that imply the termination of the contract.
Among these last ones we have from unjustified absences to contract breaches, harassment, abuses, etc. As we said, HR must provide the evidence for it.
Offboarding in the termination of employment contracts
Regardless of the reason causing the termination of the employment contract, HR will have to manage the offboarding of the worker. It is another of the essential tasks of Human Resources.
This will allow us to complete the contract termination ensuring we do not forget any procedure.
In fact, one of the main reasons to develop offboarding is that it allows us a ordered transition. HR must know at all times when its workers’ contracts end.
They also need to know when an employee is retiring. This way, we are prepared for the change.
What’s more, we can hire the replacement and train them with the employee who is leaving. When dealing with an abrupt termination of employment contracts, we need an offboarding checklist.
Thus, we ensure that we comply with all legal procedures: documentation, severance pay, pending vacations… We do not leave any loose ends.
When managing an end of contract, HR must inform the rest of the staff. Ideally, do it about 10 days before the worker leaves.
Of course, before that you will have to inform him and ask him how he wants the staff to be informed. This way, we also prevent rumors from spreading.
Having a software like Sesame HR will help us manage offboarding. Just as it helped us to welcome him in the onboarding process, we can use it in the farewell process.
Do you want to know more about the termination of contracts and its consequences in the management of the staff? Discover related content in the Sesame HR blog, your reference HR software.
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