Termination Clause in UK Contracts: What It Means & Example Wording

When to Include a Termination Clause

• In every commercial contract to provide certainty about how and when the arrangement can be ended
• In service agreements and SaaS contracts where ongoing obligations need clear exit terms
• In employment contracts alongside statutory notice requirements under the Employment Rights Act 1996

Example Wording

This example wording is illustrative only. Customise it to your specific circumstances and consider seeking legal advice.

Is a Termination Clause Enforceable in the UK?

Termination clauses are generally enforceable in the UK provided they are clear and not contrary to statute. In employment contracts, the clause must comply with the statutory minimum notice periods set out in section 86 of the Employment Rights Act 1996 (one week for each year of service, up to 12 weeks). For commercial contracts, courts will uphold express termination provisions unless they are found to be penalty clauses or unconscionable. The Supreme Court decision in Cavendish Square Holding BV v Makdessi [2015] UKSC 67 clarified the test for penalties.

Common Mistakes

• Failing to specify which obligations survive termination — without survival language, confidentiality and IP provisions may fall away when the contract ends
• Not including a termination for insolvency trigger, which can leave you locked into a contract with a failing counterparty
• In employment contracts, setting notice periods below the statutory minimum — any contractual notice period shorter than the statutory minimum is overridden by statute