Termination of the Employment

Just Cause for termination employment of Employment under the U.S. law is misconduct of an employee, or some other event relevant to the employee, which justifies the immediate termination of the employment contract.  A sufficient reason to terminate an employment contract immediately and for which, no notice or severance pay is due to the employee.

Under federal law, it is illegal for employers to fire an employee because of the employee's race, gender, national origin, disability, religion or age (so long as the employee is at least 40 years old).  

Some states also take their wrongful termination laws further and add more "protected classes."  Termination for cause is serious business.  Employers and employees have many reasons for parting ways, but employment termination for cause is not a desirable outcome - for either the employer or the employee.  Termination for cause generally occurs when an employee makes a severe error in actions or judgment.

Termination for Cause

When an employee's employment is terminated for cause, the employment is terminated for a reason which is given to the employee and stated in the termination letter.

Termination for a cause can occur for any actions that an employer considers being grave misconduct.  

Examples of such situations include these.

• Violation of the company code of conduct or ethics policy,

• Failure to follow company policy,

• Breach of contract,

• Violence or threatened violence,

• Threats or threatening behaviour,

• Stealing company money or property,

• Lying,

• Falsifying records,

• Extreme insubordination,

• Harassment,

• Failing an alcohol or drug test,

• Conviction for some crimes, or,

• Watching pornography on line.

There are a lot of loose terms in the world of employment law.  Terms such as “at-will”, “contract”, “progressive discipline” and other common terms have meant that many of us think we know, but when pressed may get a little vague.  A very common such term in the termination context is “just cause” termination.

Usually, “just cause” is a provision in an employment contract.  It differentiates the basis for a termination from that of a reduction in force or simple exertion of at-will employment rights by requiring a reason for a termination.  In a pure at-will employment situation, employers do not have to provide a reason for termination unless there is a request made by statute.  In an employment contract with a just cause provision, the employer articulates the basis for the cause in order to terminate the contract without notice, and/or provide differently, or reduced or no severance benefits.

The meaning of “just cause” in an employment contract should be distinguished from the meaning of “just cause” in a union setting.  Most collective bargaining agreements require “just cause” for discipline and discharge.  

If a union files a grievance over the termination of a union member, the employer typically has the burden to show “just cause” existed for the termination during a labor arbitration hearing.  In the union context, “just cause” is a term of art that labor lawyers and labor arbitrators understand has a certain meaning, which can be very different from the meaning of “just cause” in an employment contract.

In the employment context, “just cause” is protection for the employer (who can avoid severance in a severe misconduct situation) and for the employee (who obtains severance unless there is demonstrable just cause).  More senior executives require this protection.  Some contracts simply use the term in an undefined manner and apparently rely upon, one would say charitably, the “common opinion of mankind.”  Good luck enforcing that one in court.

A well-drafted just cause provision in an employment contract lists the basis for termination in ways that are objectively definable.  That’s easier said than done, of course.  In extreme situations, such as conviction of a felony or misappropriation of funds, the definition can be set forth in a very straightforward way.  But in situations that sound in dissatisfaction with the employee’s performance, disputable subjective elements can creep in.  

That is why it is common to see in a just cause provision notice and opportunity to cure provisions that will allow the employer to spell out the reasons for the termination and demand reasonable care and, thereby, create a clear and objective record.  Of course, this may not work according to plan since the employee can dispute the reasons or only partially comply or other such complications.  But the best advice is not to “go generic”, but to work with legal counsel in drafting just cause provisions that fit the specifics of a particular executive employment situation.