Employment Termination Law & Legal Definition


Most employers have the right to dismiss an employee for just cause, such as theft from the business, selling trade secrets, and not fulfilling job duties. Just cause may or may not be defined by the individual employer. An employee-at-will is one who does not have an employment contract governing the terms of dismissal, and therefore is much less protected in their rights to maintain employment. An oral contract of employment offering the expectation of continued employment may prevent a finding of employee-at-will status. Employee-at-will issues vary according to state law.

In the absence of an existing law, employment contract, or collective bargaining agreement to the contrary, employment relationships are generally considered to be employment-at-will. Both the employer and employee are free to terminate the employment relationship at any time, without notice, and for good reason, bad reason, or no reason at all.

Termination of an employee for discriminatory reasons, such as losing a job on the basis of race, color, national origin, sex, religion, disability, pregnancy, or age is covered under federal and state antidiscrimination laws such as the Civil Rights Act of 1964, the Americans with Disabilities Act (ADA), the Pregnancy Discrimination Act, or the Age Discrimination in Employment Act (ADEA).

Upon termination, an employee may have rights to back pay, vacation pay, retirement, unemployment compensation, and other benefits. Some of the issues involved in post-employment litigation include illegal discrimation, violation of non-competition agreements, and wrongful disclosure of trade secrets.

Montana is the only state that has a “just cause” termination statute. In all other states, at-will employment and terminations without cause have been upheld by the courts. A couple of states, California and Georgia, have statutes permitting terminations without cause. Without a contractual clause or statute governing notice of termination, employers are generally not required to give a certain amount of notice before terminating an employee.