When Is Your Position Untenable? How to Write a Resignation Letter for Small Business Owners and Employees

Making the decision to leave a business, whether you’re the owner, a co-founder, or an employee, is rarely simple. Sometimes, though, circumstances change so much that your position at work becomes “untenable”-meaning it’s simply no longer realistic or reasonable for you to stay.

Whether you’re facing difficult workplace dynamics, ethical disagreements, or business changes outside your control, understanding what makes a position untenable-and how to resign the right way-can protect your reputation, your legal standing, and even your business interests.

In this guide, we’ll break down what an untenable position means, the legal and practical steps to consider, and exactly how to write a clear, professional resignation letter that keeps you protected and compliant. If you’re navigating this tricky decision, keep reading for plain-English advice tailored to UK small business owners, directors, and employees alike.

What Does 'Position Untenable' Mean In The Workplace?

“Position untenable” is one of those legal-sounding phrases you might come across when things have really taken a turn at work. But what does it actually mean in a small business context?

In plain terms, a position becomes untenable when it’s become impossible-or at the very least, completely unreasonable-for you to continue in your job, partnership, or ownership role. This situation might arise because:

• You’re facing bullying, harassment, or discrimination that isn’t being addressed
• The business has made fundamental changes to your duties or terms of employment (sometimes called 'constructive dismissal')
• There has been a breakdown of trust or a major conflict with business partners or colleagues
• The culture or direction of the business has shifted in a way you can’t support (for example, ethical disagreements)
• Serious legal or financial risks have emerged, and you’re not willing or able to remain involved

The key theme? Your continued involvement is no longer workable-staying would likely be a mistake for your wellbeing, reputation, or even your personal liability.

When Should You Consider Resigning Due To An Untenable Situation?

Not every tough spot at work means you need to quit tomorrow. Sometimes, issues can be worked through with a difficult conversation or proper support. But in other cases, resignation is the best (or only) way forward-especially if the business relationship is permanently damaged, or you could be exposed to legal or financial risks if you stay.

As a business owner, director, or shareholder, you might be forced to leave if:

• Your fellow directors are acting unlawfully or putting the company at risk, and your concerns are being ignored
• You’re being excluded from key decisions or denied appropriate information
• The business is going in a direction that fundamentally contradicts your values, ethical stance, or legal obligations

As an employee, common triggers include:

• Major changes to your role without consent (a potential constructive dismissal)
• Bullying, discrimination, or a toxic working environment
• Non-payment of wages or statutory entitlements
• The company failing to address serious health and safety concerns

Sometimes the business may be at a crossroads-like an ownership change or strategic pivot-and you might genuinely feel unable to contribute as before. In these cases, resigning on good terms, with the right legal groundwork, is key.

What Legal Risks Do Business Owners And Employees Face When Resigning?

Walking away from a business or job can seem straightforward, but there are legal implications to keep in mind. As an owner or director, you’ll want to consider:

• Any Articles of Association or shareholder agreements that outline what happens if someone resigns or exits
• Your duties under UK company law, particularly if your exit is due to concerns about illegality or misconduct (you may need to formally record your objections)
• Potential restrictions, like non-compete or confidentiality clauses, that might continue to apply after you leave
• Notice periods and handover requirements

For employees, the focus is typically on:

• Giving the right notice under your contract or local law
• Pursuing claims for unfair or constructive dismissal if you’re forced out
• Remaining compliant with any post-employment restrictions (like non-compete or confidentiality clauses)
• Receiving all your owed pay, holiday entitlement, and benefits

It’s wise to seek professional legal advice if:

• You suspect unlawful business conduct
• You’re concerned about director/shareholder liability
• You wish to claim constructive dismissal
• You want reassurance that your resignation letter is worded and handled correctly

Setting up a smooth, legally secure exit protects both your interests and those of your former business or employer-minimising the risk of disputes or reputational harm down the track.

What Should A 'Position Untenable' Resignation Letter Include?

Whether you’re a director, small business owner, or employee, the resignation letter is a crucial document for formally recording your decision to leave-especially if your position’s become untenable.

Your resignation letter should always:

• State clearly that you are resigning (avoid ambiguous language)
• Specify your notice period or intended final working day
• Outline the broad reasons for your resignation-particularly if there are legal, ethical, or serious practical concerns making your position untenable
• Remain factual, objective, and professional-avoid emotional language, blame, or threats
• Request written confirmation of your resignation, entitlements, and, if needed, any final arrangements

If you feel comfortable, you may briefly mention your hope for a smooth transition and thank the business or employer for the opportunities you’ve had. However, in untenable situations, your focus should be on clarity and self-protection rather than warmth or detail.

Example of a 'Position Untenable' Resignation Letter (Employee):

Dear ,
I am writing to formally resign from my position as  with effect from . As per my contract, I am providing  weeks’ notice, with my last working day being .
Due to recent changes in the working environment and issues that have made it impossible for me to carry out my role effectively and in line with my professional standards, I find my position has become untenable. This has not been an easy decision, but after attempting to resolve these concerns without success, I feel I have no alternative but to step down.
Please confirm receipt of this letter and advise on any outstanding matters. I will do my best to ensure a smooth transition during my notice period.
Yours sincerely, 

If you’re a director or business partner, you may also need to reference company processes (like board resolutions or updating Companies House) and formally record any objections or concerns for legal protection.

Step-by-Step Guide: Writing An Untenable Position Resignation Letter

1. Review your contract and business agreements. Check notice periods, post-termination restrictions, and any clauses about resignation or dispute resolution. Don’t just rely on memory-get clear on your legal obligations first.
2. Gather documentation. If you’re resigning due to misconduct, major disagreements, or legal issues, save relevant emails, meeting notes, and reports to support your position. This can help should any legal challenge arise.
3. Draft your letter factually and professionally. Stick to the facts: state your resignation, intended last day, and broad reason (e.g. “my position has become untenable due to...”)
4. Don’t assign blame or make threats. Avoid inflammatory language and stick to objective statements.
5. Send the letter to the appropriate person. For employees, this is usually your manager and HR; for directors/partners, it may be the board or company secretary.
6. Keep a record. Save a copy of your signed letter and confirmation of receipt. This could be important if disputes arise about your exit.
7. Consider a handover note. Offer to support with a thorough handover (if feasible) - it’s not just courteous, it protects your reputation.

What Else Do You Need To Do When Your Position Becomes Untenable?

Writing the resignation letter is only one part of managing your departure from a difficult situation. You should also:

• Request an exit interview-especially if you want to flag issues or ensure a formal record of your concerns
• Check your final payslip includes all your due salary, unused holiday pay, and any other entitlements
• Return company property and ensure all data/privacy obligations are met
• For company directors, follow proper resignation procedures - update Companies House and document your departure in board minutes (get more details in our director removal and resignation guide)
• Assess any restrictive covenants (such as non-compete or non-solicit clauses) that may affect your next steps
• Plan your references and how you will discuss your exit in future interviews or business dealings
• Seek legal advice, especially if you think your rights have been breached, or that you may face post-resignation disputes (like shareholder disagreements, IP claims, or confidentiality breaches)

Could Resigning Put You At Risk Of Legal Claims?

In most cases, providing proper notice and staying professional during your exit will protect you from legal trouble. However, there are scenarios where dropping everything and walking out can backfire.

Risks might include:

• Breach of contract or directors’ duties if you fail to give required notice or handover (especially for company leaders and co-founders)
• Loss of entitlements or claims for damages if you walk out without cause
• Reputational harm if details of your resignation are not carefully managed
• For directors/owners: ongoing liability if you haven’t formally separated yourself from the company’s operations or debts

If you’re unsure, get tailored advice-sometimes you may be better off negotiating an agreed exit (or settlement agreement) that clearly defines rights and obligations on both sides.

Alternatives To Resignation: Can The Situation Be Fixed?

Before making anything final, it’s worth considering whether the problems making your position untenable could be resolved. Options may include:

• Formal grievance procedures, if you’re an employee facing unfair treatment
• Mediation between business partners, owners, or directors-for instance, if conflict or miscommunication is at the root of the problem
• Changing your role or responsibilities within the business
• Seeking adjustments for health or personal circumstances (learn more in our guide to absence from work policies)

However, if your concerns are ignored or the issues run deeper, resignation-and following the right legal steps-is usually the best way to safeguard both your integrity and future interests.

Where Can You Get Help Drafting Your Resignation Letter Or Understanding Your Risks?

If you’re in the thick of a difficult decision, you don’t have to go it alone. At Sprintlaw, we specialise in supporting small business owners, directors, and employees with legally sound solutions-whether you’re staying or leaving.

We can help you:

• Review your contracts or partnership agreements for exit terms
• Draft a resignation letter that's clear, compliant, and protects your interests
• Understand your rights and obligations if your position is untenable
• Negotiate settlement agreements or navigate disputes
• Handle all the formalities of company director or partner resignations

For more information, explore our guides on ending employment contracts, constructive dismissal and partnership dissolution.

Key Takeaways: Resigning When Your Position Is Untenable

• Your position is “untenable” when it’s impossible or unreasonable for you to remain-due to legal, ethical, or practical reasons.
• Always review your contract or shareholder agreement for exit clauses, notice requirements, and post-exit obligations before resigning.
• A resignation letter should be clear, professional, and objective-stating your intention, notice period, and (if appropriate) that your reason for leaving is due to an untenable situation.
• Preserve key documents, provide proper notice, and maintain professionalism to minimise the risk of disputes or legal claims.
• Seek legal advice if you’re leaving a directorial or co-owner role, or if workplace issues could escalate into complaints or claims.
• Explore resolution or mediation options where possible, but act quickly to protect yourself if the situation won’t improve.
• Getting your departure right is crucial for your future career, reputation, and long-term legal protection.

If you need guidance on writing a resignation letter, understanding your legal position, or protecting your business as you exit, our team is here to help. Reach out at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.