Termination for Cause

Termination for cause is the act of ending an employment contract by an employer due to an employee's serious misconduct or violation of company policies. While serious misconduct and policy violations are common reasons for termination for cause, it is not limited to those reasons. Other causes could include poor performance, insubordination, or breach of confidentiality.

The 'cause' in this situation refers to the reason for release from employment, usually decided by a written document such as an employment contract and corporate policy. It can also be based on a combination of factors, including the specific circumstances of the employee’s behavior and the employer’s discretion. An employer can discontinue their connection with an employee in various ways.

Employees are terminated for reasons when their activities violate corporate policy and may have substantial consequences for the company, clients, and other employees. Terminating employee services with cause may be necessitated by violating the company's code of conduct or continuous poor performance. It’s important to note that termination for cause generally requires a serious breach or repeated violations, rather than isolated incidents. In this blog, let's learn more about termination for cause and its several aspects.

Main Reasons that Lead to Termination for Cause

The following are the important reasons why an employer may terminate an employee for a cause:

• Gross Misconduct: This is unacceptable behavior of an employee that is improper for the job and can endanger the person's life or ruin an organization's reputation. Most businesses have a well-drafted code of conduct available to all employees/workers upon hire. The policy also specifies the repercussions of failing to follow the code of conduct.
• Theft of Company Assets: This is one of the most typical types of employee wrongdoing. Some employees may occasionally violate the code of conduct and steal from their employers. Any time an employee takes away something from an establishment that does not belong to them, it's considered theft.
• Inappropriate Relationships: Workplace relationships should be kept strictly professional to uphold the company's integrity and safeguard all employees' welfare. A romantic relationship in the workplace can amount to sexual harassment and damage the company's reputation. In addition, the parties in question may discriminate against other employees and favor the one with whom they are romantically involved, leading to problems in the workplace.
• Breach of Confidentiality: Every organization has sensitive information that all personnel must protect. Employees should be warned about the risks of revealing such information and the penalties/fines for doing so. Businesses mustn't disclose client information to outside parties. Employees in a hospital, for instance, are burdened with the responsibility of safeguarding patient information.
• Flagrant Disobedience: Some workplace activities may appear amusing, but if repeated too frequently, they might develop into insubordination. An employee extending the leave of their own volition, skipping work schedules without contact, speaking rudely to superiors, declining to deliver information to a senior upon request, and insulting fellow employees are examples of such activities.
• Misconduct with Alcohol/Drugs: Many businesses have a zero-tolerance policy for drugs and alcohol. Drugs can impair a person's judgment, affecting their work or putting their clients at risk. When an employee fails a drug and alcohol test, they may be fired for cause.
• Conviction of an Offense: When an employee commits an offense and is accused, the employer-employee relationship may suffer. If the company has mentioned in writing that criminal convictions or offenses will result in discharge, the employee may be dismissed immediately. However, due process should generally be followed, which may include providing notice, conducting an investigation, and giving the employee an opportunity to respond before making a final decision.
• Breach of Safety Rules: A person who deliberately endangers himself, others, or the firm is subject to dismissal for cause. Consider the following case, “A school van driver disregards a red traffic light, endangering the lives of children”. Even if the driver avoids conviction, he may be discharged for threatening himself and the children.
• Bankruptcy: Some employers need employees to manage their finances carefully to avoid bankruptcy, mainly if they work with the company's finances. If an employee is discovered bankrupt, the employer may have legal grounds to terminate the employee for a reason under company regulations.

Steps Towards Effective Termination for Cause

The following are the steps needed to terminate an employee for cause:

1. Make an Employee Handbook Available. This document creates disciplinary procedures, conveys them to all employees equally, and can protect the company if an employee later sues. On the first day, give new hires a physical copy and have them acknowledge receipt in writing. Although "boilerplate" handbooks are available online, always consult a lawyer to ensure the handbook is tailored to the company and adheres to local regulations.
2. Record Violations. A talk needs to be more robust regarding bad performance or corporate policy infractions. Any concerns should be documented in writing and recognized by the employee. Although this can be done by email, I propose a written memorandum signed by the employee and placed in their personnel file.
3. Enforce Discipline Policies. Whatever the repercussions are for violating corporate policy, it is the company's responsibility as the employer to enforce it constantly. Even with the best intentions, making exceptions exposes them to charges of uneven treatment based on race, gender, age, or handicap.
4. Investigate Before Terminating. When there is a desire to terminate someone, a comprehensive inquiry into the reason for firing should begin. Documented interviews with managers and coworkers and a study of any associated computer files and emails should be included. All evidence should be kept to avoid charges of spoliation (interfering with proof).
5. Understand the Law. Certain laws may be fundamental to the person the company is terminating. For example, age, race, and gender discrimination, as well as disability discrimination. If any concerns are there, it should talk with an attorney to go through any special circumstances and the process that led up to the termination.
6. Inform the Employee. The company is not required to give an employee notice of termination as an at-will employer, but advising of problems and providing the person an opportunity to improve might cushion the pain. Employees aware of the issues are less likely to file a claim. Plaintiffs' recurrent refrain: "They never told me I was doing anything wrong."
7. Enact Termination with Generosity. If an employee does not improve after being given a warning, it is appropriate to exit the relationship with dignity and professionalism. Firings should occur privately, away from other employees, with at least one witness. It’s also important to ensure the employees’ rights are respected and that the termination is handled in a professional and respectful manner.
8. Make the Explanation Concise and Accurate. Unnecessary information can leave employees with more questions than answers. It may raise further questions in court. Preparing a script with bullet points before the meeting is always smart.
9. Avoid Sugar-Coating. Clarify the cause for termination. If an employee is deceived and the genuine cause is revealed after a claim is made, the employee will say that the claim was only a pretext or false. Once demonstrated, the burden may shift back to the employer to demonstrate a non-discriminatory reason for the termination.
10. Meet the Requirements. Make careful to clarify any legal requirements, such as COBRA benefits, last paycheck, unemployment choices, and the transportability of other insurance. This must be documented in writing.

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Key Terms for the Termination for Cause

• Misconduct: Refers to an employee's behavior or activities that violate corporate policies, codes of conduct, or employment terms and can range from major offenses such as theft or harassment to frequent policy infractions.
• Reasonable Cause: The legal or valid justification for terminating an employee's employment contract because of misconduct or a violation of company regulations, indicating that the employer has sufficient grounds to justify the termination.
• Disciplinary Action: Imposing sanctions or repercussions on an employee for misconduct, which may include warnings, suspensions, or termination without cause.
• Due Process: The fair and unbiased approach employers follow when terminating an employee for cause, which often includes providing notice, conducting an inquiry, etc.
• Appeal or Grievance Process: Termination of service decision of Employees can challenge or appeal if they believe it was unfair or improper, and they have the option for submission of their case before an impartial authority or committee.

Final Thoughts on the Termination for Cause

Termination for cause is a severe disciplinary measure businesses use when an employee commits major misconduct or disobeys company rules. Documenting the misconduct, carrying out a thorough investigation, giving the employee notice, giving them a chance to respond, coming to a reasonable conclusion, adhering to employment contracts and policies, and guaranteeing due process are all common steps. It’s also important to ensure disciplinary actions are consistent and fair to avoid potential claims of discrimination or unfair treatment. To properly handle termination for cause and reduce legal risks, companies must abide by applicable laws and engage with legal counsel.

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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