Termination by employer for cause: Overview, definition, and example
What does "termination by employer for cause" mean?
"Termination by employer for cause" refers to the dismissal of an employee by their employer due to a specific, justifiable reason, often related to the employee’s behavior, performance, or failure to meet the terms of their employment. "Cause" generally refers to serious misconduct or violations of company policies, such as theft, insubordination, violation of company rules, or failure to perform job duties effectively. When an employee is terminated for cause, they typically forfeit certain benefits, such as severance pay or unemployment benefits, because the termination is viewed as the employee’s fault.
The exact definition of "cause" can vary depending on the terms of the employment contract or company policies, but it generally involves actions or omissions by the employee that are deemed to significantly disrupt the employer's operations or violate the terms of the employment agreement.
Why is "termination by employer for cause" important?
"Termination by employer for cause" is important because it helps employers protect the interests and efficiency of their business by allowing them to terminate employees who engage in misconduct or fail to meet expectations. It also helps maintain fairness in the workplace by providing a mechanism for handling employees whose behavior or performance is detrimental to the company.
For employees, understanding the circumstances under which they may be terminated for cause is crucial, as it outlines what actions could lead to dismissal and what protections they may have under labor laws. For employers, the "for cause" clause serves as a safeguard in case an employee's behavior or performance negatively impacts the organization.
Understanding "termination by employer for cause" through an example
Imagine an employee who repeatedly arrives late to work, despite multiple warnings and a formal performance improvement plan. The employer may decide to terminate the employee for cause, as the behavior constitutes a breach of company policies and disrupts the productivity of the workplace. In this case, the employee may not be entitled to severance pay or unemployment benefits because the termination was due to their own actions.
In another example, an employee is found to have stolen company property, violating the employer’s trust and ethical standards. This is a clear case of termination for cause, as theft is considered a serious violation of employment terms. The employer terminates the employee immediately, with the understanding that the employee’s actions justify the dismissal and result in the loss of any further benefits.
An example of "termination by employer for cause" clause
Here’s how a clause about termination by employer for cause might appear in an employment contract:
“The Employer may terminate the Employee’s employment immediately for cause, including but not limited to, serious misconduct, violation of company policies, theft, dishonesty, insubordination, failure to perform duties, or any other conduct detrimental to the Employer’s operations. In the event of termination for cause, the Employee will forfeit any severance pay and other benefits unless otherwise required by law.”
Conclusion
"Termination by employer for cause" is a significant concept in employment law and workplace management, providing employers with a means to end employment when an employee's actions or performance justify such a decision. This type of termination is typically due to misconduct or failure to fulfill job responsibilities, and it usually results in the loss of certain benefits for the employee. It is essential for both employers and employees to clearly understand the reasons and procedures for termination by cause to ensure fairness and compliance with legal requirements.
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.