Good reason clause: Copy, customize, and use instantly
Introduction
A "good reason" clause outlines specific conditions under which an employee, typically an executive, can terminate their employment agreement without forfeiting severance or other benefits. This clause is critical for protecting the employee’s rights in situations where the employer’s actions substantially change the terms of employment or otherwise violate the agreement.
Below are templates for good reason clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Definition of good reason for voluntary termination
This clause defines "good reason" for voluntary termination by the employee.
For the purposes of this Agreement, "good reason" for voluntary termination by the Employee shall include, without limitation: (i) a material reduction in the Employee’s base salary or other compensation, (ii) a substantial diminution of the Employee’s duties, responsibilities, or title, (iii) a requirement to relocate to a location that is more than [specified miles] from the Employee’s current location, or (iv) any breach by the Company of this Agreement.
Good reason following change in control
This clause defines "good reason" in the event of a change in control.
"Good reason" for voluntary termination shall exist if, following a change in control of the Company, the Employee experiences (i) a material reduction in compensation, (ii) a change in reporting structure, (iii) a significant reduction in responsibilities or duties, or (iv) a relocation of the Employee’s primary place of business by more than [specified miles].
Good reason due to non-payment of compensation
This clause defines "good reason" for voluntary termination due to non-payment of compensation.
The Employee shall have "good reason" to terminate this Agreement if the Company fails to pay the Employee’s salary, bonuses, or other compensation as required under this Agreement, and such failure continues for more than [specified number] of days after written notice is given by the Employee.
Good reason for failure to comply with contractual obligations
This clause defines "good reason" for termination due to the Company’s breach of contractual obligations.
The Employee may terminate this Agreement for "good reason" if the Company fails to perform any material obligation under this Agreement, including but not limited to failure to provide agreed-upon benefits, failing to maintain a safe working environment, or any other material breach that remains uncured after [specified number] of days following notice from the Employee.
Good reason for demotion
This clause defines "good reason" in the case of a demotion.
For purposes of this Agreement, "good reason" shall include, without limitation, the Company’s decision to demote the Employee or otherwise reduce the Employee’s title, responsibilities, or authority in a manner that significantly diminishes the scope of the Employee’s role or function.
Good reason due to adverse changes in job duties
This clause defines "good reason" due to adverse changes in job duties.
"Good reason" shall include any material change in the Employee’s duties, responsibilities, or the nature of the Employee’s work that results in a position that is substantially less prestigious, important, or remunerative than the Employee’s previous role, as reasonably determined by the Employee.
Good reason for failure to provide agreed-upon benefits
This clause defines "good reason" for failure to provide benefits.
The Employee shall have "good reason" to terminate this Agreement if the Company fails to provide the benefits outlined in Section [X] of this Agreement, including but not limited to health benefits, retirement benefits, or any other agreed-upon fringe benefits, and such failure is not remedied within [specified number] of days following written notice from the Employee.
Good reason for material change in reporting structure
This clause defines "good reason" for a material change in reporting structure.
The Employee may terminate this Agreement for "good reason" if there is a material change in the Employee’s reporting structure, including but not limited to, being required to report to someone other than [title of the superior] or any other significant alteration in the Employee’s reporting line that diminishes the Employee’s role within the Company.
Good reason following involuntary reduction in salary
This clause defines "good reason" for a reduction in salary.
For the purposes of this Agreement, "good reason" shall include a reduction in the Employee’s annual base salary or bonus structure without the Employee’s written consent, or a reduction in compensation that materially impacts the Employee’s total compensation package.
Good reason for assignment of duties inconsistent with position
This clause defines "good reason" for an assignment of duties inconsistent with the employee’s position.
"Good reason" shall include any assignment of duties or responsibilities by the Company that is inconsistent with the Employee’s position, or any action that would result in a material diminution in the Employee’s status, position, or responsibilities, as determined by the Employee in their reasonable discretion.
Good reason due to unlawful actions of the company
This clause defines "good reason" in the case of unlawful actions by the company.
The Employee shall have "good reason" to terminate this Agreement if the Company engages in illegal activities, discriminatory actions, or other unlawful behavior, which the Employee reasonably believes to be a material violation of applicable law or ethical standards, and such behavior remains uncorrected after [specified number] of days.
Good reason due to health reasons
This clause defines "good reason" for termination due to health reasons.
The Employee may terminate this Agreement for "good reason" if the Employee is unable to perform their duties due to a physical or mental health condition, and the Company does not make reasonable accommodations for the Employee in accordance with applicable disability laws, or if the health condition prevents the Employee from fulfilling their role for a continuous period of [specified number] of months.
Good reason for breach of trust or fiduciary duty
This clause defines "good reason" for breach of trust or fiduciary duty.
The Employee may terminate this Agreement for "good reason" if the Company or any officer or director of the Company breaches any fiduciary duty owed to the Employee, or if there is a significant breach of trust between the Company and the Employee, which negatively impacts the Employee’s ability to perform their duties.
Good reason for material negative change in company operations
This clause defines "good reason" for material negative changes in operations.
"Good reason" shall include any material negative change in the Company’s financial or operational condition, including but not limited to the sale, merger, or liquidation of the Company, or any other event that substantially changes the business model or operations in a manner that significantly reduces the Employee’s role or position.
Good reason due to inability to carry out duties
This clause defines "good reason" when the employee is unable to carry out duties.
The Employee shall have "good reason" to terminate this Agreement if, due to circumstances outside the Employee’s control, the Employee is unable to perform their essential job duties, and the Company fails to make reasonable accommodations or adjustments that allow the Employee to fulfill their role.
Good reason for failure to maintain job conditions
This clause defines "good reason" for failure to maintain agreed job conditions.
The Employee may terminate this Agreement for "good reason" if the Company fails to maintain the job conditions or work environment specified in this Agreement, including failure to provide a safe and supportive working environment, and if such failure is not remedied within [specified number] of days after written notice from the Employee.
Good reason following reassignment of position
This clause defines "good reason" for reassignment of position.
The Employee shall have "good reason" to terminate this Agreement if the Company reassigns the Employee to a position of lesser responsibility, status, or pay, or if the Employee is demoted to a role that does not reflect the Employee’s skills, experience, and qualifications.
Good reason following failure to provide adequate resources
This clause defines "good reason" for failure to provide adequate resources.
"Good reason" shall exist if the Company fails to provide the Employee with the resources, support, or staff necessary to effectively perform their duties, and such failure materially impairs the Employee’s ability to fulfill their role in a manner consistent with the terms of this Agreement.
Good reason for a substantial reduction in job duties
This clause defines "good reason" for a substantial reduction in job duties.
"Good reason" shall exist if the Company makes a substantial reduction in the Employee’s job duties, including a material decrease in the scope of responsibilities, authority, or position, which diminishes the role of the Employee in a way that negatively impacts their employment experience.
Good reason for a change in reporting structure or title
This clause defines "good reason" for a change in the reporting structure or job title.
If the Company significantly alters the Employee’s reporting structure, such as requiring the Employee to report to a different individual or lowering the Employee’s title, the Employee shall have "good reason" to terminate this Agreement.
Good reason for failure to provide promised compensation
This clause defines "good reason" for failure to provide promised compensation.
The Employee shall have "good reason" to terminate this Agreement if the Company fails to pay any compensation or benefits agreed upon in this Agreement, such as salary, bonuses, or equity compensation, and such failure is not rectified within [specified number] of days after written notice.
Good reason for significant change in work location
This clause defines "good reason" for a significant change in the work location.
"Good reason" shall exist if the Company requires the Employee to relocate their primary place of work to a location more than [specified distance] from the current work location, or if the new location imposes significant additional costs or hardships on the Employee.
Good reason for failure to maintain health and safety standards
This clause defines "good reason" due to failure to maintain health and safety standards.
If the Company fails to maintain a safe and healthy work environment, in violation of applicable health and safety laws or the terms of this Agreement, and the Employee's concerns are not addressed within [specified number] of days, the Employee shall have "good reason" to terminate the Agreement.
Good reason for change in the Company’s business direction
This clause defines "good reason" for a material change in the Company’s business direction.
The Employee shall have "good reason" to terminate this Agreement if the Company undergoes a material change in business direction, including a shift in strategy, product offerings, or operations, that negatively affects the Employee’s role or opportunities within the Company.
Good reason due to illegal or unethical behavior by the company
This clause defines "good reason" due to unethical or illegal behavior.
"Good reason" shall exist if the Employee reasonably believes the Company has engaged in illegal or unethical activities, including fraud, discrimination, or violation of law, which substantially impact the Employee’s role, reputation, or duties within the Company.
Good reason due to a failure to provide career development opportunities
This clause defines "good reason" due to lack of career development.
The Employee may terminate this Agreement for "good reason" if the Company fails to provide career development opportunities, including reasonable training, promotions, or access to skill-building resources, which hinders the Employee’s professional growth within the Company.
Good reason for failure to protect the Employee’s reputation
This clause defines "good reason" due to failure to protect the Employee’s reputation.
"Good reason" shall exist if the Company takes any action or inaction that significantly harms the Employee’s professional reputation or standing, either within the Company or in the broader industry, and does not remedy the situation after written notice from the Employee.
Good reason for failure to provide agreed-upon working conditions
This clause defines "good reason" for failure to provide agreed-upon working conditions.
If the Company fails to provide the working conditions stipulated in this Agreement, including an adequate office, necessary tools, or a suitable work environment, the Employee shall have "good reason" to terminate the Agreement after the Company is given a reasonable opportunity to cure the breach.
Good reason for denial of agreed-upon bonuses or commissions
This clause defines "good reason" for denial of agreed-upon bonuses or commissions.
The Employee shall have "good reason" to terminate this Agreement if the Company refuses to pay any bonus or commission that is due under the terms of this Agreement, and such failure is not corrected within [specified number] of days after notice.
Good reason due to loss of trust in leadership
This clause defines "good reason" due to loss of trust in leadership.
"Good reason" shall exist if the Employee loses confidence in the Company’s leadership due to decisions, conduct, or actions taken by the executives or board members that significantly impact the Employee’s role, trust, or performance expectations.
Good reason for reduction in executive responsibilities
This clause defines "good reason" for a reduction in executive responsibilities.
The Employee shall have "good reason" to terminate this Agreement if their executive responsibilities are significantly reduced, including a loss of decision-making authority, leadership role, or involvement in key strategic decisions of the Company.
Good reason for changes in reporting structure or managerial hierarchy
This clause defines "good reason" for changes in reporting or hierarchy.
"Good reason" shall exist if the Company alters the Employee’s reporting structure, such as requiring the Employee to report to a lower-ranking manager, or if the Employee’s role is placed within a different managerial hierarchy that significantly undermines their position.
Good reason for failure to adhere to agreed business plans
This clause defines "good reason" due to failure to follow business plans.
The Employee shall have "good reason" to terminate this Agreement if the Company materially deviates from the mutually agreed business plans, such as significant changes in the company’s strategic direction or financial goals, that directly impact the Employee’s role or employment terms.
Good reason due to adverse changes in compensation structure
This clause defines "good reason" due to adverse changes in compensation.
If the Company changes the Employee’s compensation structure in a manner that materially reduces the Employee’s total compensation, such as reducing base salary, bonuses, or equity participation, the Employee shall have "good reason" to terminate this Agreement.
Good reason for failure to provide adequate resources to perform job duties
This clause defines "good reason" for failure to provide resources.
"Good reason" shall exist if the Company fails to provide the necessary resources, staff, or tools required for the Employee to effectively perform their job duties, and such failure is not remedied after the Employee’s reasonable request.
Good reason for failure to uphold agreed contractual rights
This clause defines "good reason" for failure to uphold contractual rights.
The Employee may terminate this Agreement for "good reason" if the Company fails to uphold any material contractual rights, including rights to benefits, severance, or compensation, and such failure is not remedied within [specified time period] after notice.
Good reason due to material changes in the employee’s job function
This clause defines "good reason" for material changes in job function.
"Good reason" shall exist if the Company makes material changes to the Employee’s job function, responsibilities, or title that significantly reduce the Employee’s ability to perform at their current level, or if the Employee is reassigned to a role with less authority or prestige.
Good reason for a change in job conditions without consent
This clause defines "good reason" for changes in job conditions without consent.
The Employee shall have "good reason" to terminate this Agreement if the Company materially changes the terms of the Employee’s job conditions, including a significant alteration in responsibilities, location, or reporting relationships, without the Employee's prior written consent.
Good reason for failure to offer adequate job security
This clause defines "good reason" for failure to provide job security.
"Good reason" shall exist if the Company fails to offer reasonable job security to the Employee, including failure to provide the Employee with a reasonable assurance of continued employment or protection against involuntary termination without cause.
Good reason for unilateral changes to compensation package
This clause specifies "good reason" due to unilateral changes in compensation.
If the Company unilaterally reduces the Employee’s compensation package, including salary, bonuses, benefits, or stock options, without the Employee’s consent, the Employee shall have "good reason" to terminate the Agreement.
Good reason for relocation requirements
This clause defines "good reason" for relocation requirements.
"Good reason" shall exist if the Company requires the Employee to relocate to a location more than [specified distance] from the current office, or if the Employee is required to relocate without reasonable notice or assistance for the move.
Good reason due to material change in job title or role
This clause defines "good reason" for a material change in job title.
The Employee may terminate this Agreement for "good reason" if the Company significantly reduces the Employee’s role or changes their title in a manner that materially affects the Employee’s responsibilities, authority, or career trajectory.
Good reason for failure to maintain agreed health insurance
This clause defines "good reason" for failure to maintain health insurance.
If the Company fails to maintain health insurance or other agreed-upon benefits for the Employee as specified in this Agreement, and such failure is not corrected within [specified period] after written notice, the Employee shall have "good reason" to terminate the Agreement.
Good reason for violation of the Employee’s rights
This clause defines "good reason" for violation of the Employee’s rights.
"Good reason" shall exist if the Company violates the Employee’s rights under the terms of this Agreement, including failure to provide legally required accommodations, failure to meet obligations regarding paid time off, or other legal rights the Employee is entitled to under the Agreement.
Good reason for wrongful reassignment or demotion
This clause defines "good reason" for wrongful reassignment or demotion.
The Employee shall have "good reason" to terminate this Agreement if the Company reassigns the Employee to a position that is a demotion or materially reduces the Employee’s responsibilities or decision-making authority.
Good reason for removal of executive perks or benefits
This clause defines "good reason" for removal of executive perks.
The Employee shall have "good reason" to terminate this Agreement if the Company removes or materially reduces any executive-level perks or benefits, including company car, travel allowances, or housing stipends, without providing reasonable substitutes.
Good reason for adverse changes to working hours or schedules
This clause specifies "good reason" for changes in working hours.
If the Company changes the Employee’s working hours or schedule in a manner that significantly reduces the Employee’s work-life balance, or if such changes are imposed without sufficient notice, the Employee shall have "good reason" to terminate this Agreement.
Good reason for failure to provide career advancement opportunities
This clause defines "good reason" for failure to provide career advancement opportunities.
"Good reason" shall exist if the Company fails to provide reasonable career advancement opportunities or does not follow through on commitments to support the Employee’s professional development as outlined in the Agreement.
Good reason for breach of non-compete terms
This clause defines "good reason" for breach of non-compete terms.
The Employee shall have "good reason" to terminate this Agreement if the Company violates the non-compete provisions of this Agreement, including forcing the Employee to work in a capacity or location that competes with the Company in breach of agreed-upon restrictions.
Good reason for removal from leadership position
This clause defines "good reason" for removal from leadership.
The Employee shall have "good reason" to terminate this Agreement if the Employee is removed from a leadership role, including any executive or managerial position, without cause or appropriate justification.
Good reason for detrimental changes to business model
This clause defines "good reason" for changes to the business model.
The Employee may terminate this Agreement for "good reason" if the Company undergoes a substantial change in business model that undermines the Employee’s role or makes the Employee’s position redundant within the organization.
Good reason for failure to follow written policies
This clause defines "good reason" for failure to follow written policies.
The Employee shall have "good reason" to terminate this Agreement if the Company fails to follow any material written policies outlined in the Agreement, which adversely affects the Employee’s role, compensation, or working conditions.
Good reason for failure to meet contractual obligations related to equity
This clause defines "good reason" related to equity compensation.
The Employee may terminate this Agreement for "good reason" if the Company fails to meet its contractual obligations regarding equity compensation, including failure to grant stock options, restricted shares, or other equity benefits promised under the terms of this Agreement.
Good reason for restrictions on professional activities
This clause defines "good reason" for restrictions on professional activities.
If the Company imposes unreasonable restrictions on the Employee’s professional activities, such as limitations on participation in industry groups, speaking engagements, or publication opportunities, the Employee shall have "good reason" to terminate this Agreement.
Good reason for failure to honor promises related to bonuses
This clause specifies "good reason" for failure to honor bonus agreements.
The Employee shall have "good reason" to terminate this Agreement if the Company fails to honor its commitments regarding bonus payments, including failure to pay performance bonuses as outlined in this Agreement.
Good reason for failure to provide agreed-upon severance package
This clause defines "good reason" for failure to provide severance.
The Employee shall have "good reason" to terminate this Agreement if the Company fails to provide the agreed-upon severance package, including severance pay, continuation of benefits, or other compensation upon termination or resignation.
Good reason for reduction in decision-making authority
This clause defines "good reason" for a reduction in decision-making authority.
"Good reason" shall exist if the Company significantly reduces the Employee's decision-making authority, including removing the Employee's right to make key operational or strategic decisions that were previously within the Employee's purview.
Good reason for failure to fulfill promises regarding job function
This clause defines "good reason" due to failure to fulfill promises regarding job function.
If the Company fails to fulfill the promises made regarding the Employee’s job function, including specific duties and responsibilities outlined in this Agreement, the Employee shall have "good reason" to terminate this Agreement.
Good reason for restrictions on freedom of association
This clause defines "good reason" for restrictions on freedom of association.
The Employee shall have "good reason" to terminate this Agreement if the Company imposes unreasonable restrictions on the Employee’s ability to participate in or associate with professional groups, networks, or affiliations relevant to the Employee’s role.
Good reason for breach of non-disclosure agreements by the Company
This clause defines "good reason" for breach of non-disclosure agreements.
"Good reason" shall exist if the Company breaches any non-disclosure or confidentiality agreements, causing harm to the Employee’s ability to perform their duties or to protect proprietary information.
Good reason for violation of equal opportunity provisions
This clause defines "good reason" for a violation of equal opportunity provisions.
If the Company violates any equal opportunity provisions, including engaging in discriminatory hiring or firing practices, the Employee shall have "good reason" to terminate this Agreement.
Good reason for sudden change in the work environment
This clause defines "good reason" for a sudden change in the work environment.
"Good reason" shall include any sudden, unnotified change in the work environment that affects the Employee's ability to perform their job effectively, including a disruptive change in management or company culture.
Good reason for failure to reimburse reasonable business expenses
This clause defines "good reason" for failure to reimburse business expenses.
If the Company fails to reimburse the Employee for reasonable and necessary business expenses as stipulated in this Agreement, the Employee shall have "good reason" to terminate this Agreement, provided the failure is not remedied within [specified period].
Good reason for imposition of unreasonable performance metrics
This clause defines "good reason" for imposition of unreasonable performance metrics.
The Employee shall have "good reason" to terminate this Agreement if the Company imposes unreasonable or unattainable performance metrics that materially affect the Employee’s ability to succeed in their role or achieve expected outcomes.
Good reason for non-payment of agreed severance benefits
This clause defines "good reason" for non-payment of severance benefits.
"Good reason" shall exist if the Company fails to provide the agreed-upon severance benefits following termination, including severance pay, continuation of benefits, or other agreed-upon compensation, as outlined in this Agreement.
Good reason due to a fundamental change in the business model
This clause defines "good reason" due to a fundamental change in the business model.
The Employee shall have "good reason" to terminate this Agreement if the Company makes a fundamental change in its business model or operations, which renders the Employee’s role redundant or significantly alters their responsibilities.
Good reason for failure to provide adequate job support
This clause defines "good reason" for failure to provide adequate job support.
The Employee may terminate this Agreement for "good reason" if the Company fails to provide the necessary support, resources, or personnel to help the Employee perform their job effectively, thus hindering the Employee’s ability to meet expectations.
Good reason for violation of non-compete terms
This clause defines "good reason" for violation of non-compete terms.
The Employee shall have "good reason" to terminate this Agreement if the Company forces the Employee to work in a position or for an entity that directly competes with the Company, violating any non-compete or non-solicitation provisions of this Agreement.
Good reason due to company’s insolvency or bankruptcy
This clause defines "good reason" for company insolvency.
The Employee shall have "good reason" to terminate this Agreement if the Company becomes insolvent or files for bankruptcy, making it impossible for the Company to fulfill its obligations under this Agreement.
Good reason for failure to honor performance bonuses
This clause defines "good reason" for failure to honor bonuses.
If the Company fails to honor any performance bonuses or incentive compensation agreed upon in this Agreement, the Employee shall have "good reason" to terminate this Agreement, provided such failure is not remedied within [specified period].
Good reason for material failure of employee benefits package
This clause defines "good reason" for material failure of employee benefits.
The Employee shall have "good reason" to terminate this Agreement if the Company materially fails to provide the Employee with the benefits package promised, including health insurance, retirement plans, or other agreed-upon perks.
Good reason for breach of contract terms by the employer
This clause defines "good reason" for breach of contract by the employer.
"Good reason" shall exist if the Company breaches any material terms of this Agreement, including failure to provide agreed-upon compensation, benefits, or other contractual obligations, and such breach remains uncured after written notice from the Employee.
Good reason for failure to provide an adequate work environment
This clause defines "good reason" for inadequate work environment.
"Good reason" shall include the Company’s failure to provide an adequate and safe work environment, including failure to comply with applicable workplace safety laws or neglecting necessary working conditions, thus making the Employee’s work environment untenable.
Good reason for failure to recognize promotions or advancements
This clause defines "good reason" for failure to recognize promotions.
The Employee may terminate this Agreement for "good reason" if the Company fails to recognize or act upon the Employee’s eligibility for a promotion or career advancement as outlined in this Agreement, or if the Company unreasonably denies promotion opportunities.
Good reason for unfair treatment or retaliation
This clause defines "good reason" for unfair treatment or retaliation.
"Good reason" shall exist if the Employee is subjected to unfair treatment or retaliation by the Company for exercising their rights under this Agreement, or if the Employee is discriminated against or punished for lawful actions within their role.
Good reason for significant and permanent change in working hours
This clause defines "good reason" for changes in working hours.
The Employee shall have "good reason" to terminate this Agreement if the Company makes a significant and permanent change to the Employee’s working hours, including requiring excessive overtime without compensation or significantly altering work schedules without notice.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.