Employment Contracts and Termination

August 26, 2016

Being out of work is awful. However, having to worry about losing your current job is also extremely stressful. If your employment is like most others’, it falls under the category of at-will employment. This means you can quit for any reason or no reason, and your employer can terminate you for any reason or no reason—as long as the reason is not discriminatory. In addition, the promise of future employment is not enforceable.

Only some employment contracts are enforceable. The contract must meet specific requirements (including a set term, a clear description of duties and a payment amount). An employment contract sets out employment guidelines, which are negotiated between the employer and employee. Each employment contract’s structure is very specific to the job and the employee. Employment contracts set forth what the employer is willing to provide the employee in exchange for what they expect the employee to do for the company.

Employment contracts may have automatic renewal provisions and address termination, severance pay, wages, overtime, or benefits. The contracts can include restrictive clauses (such as non-compete clauses, or non-disclosure of trade secrets) which can survive the termination of an employment contract. Many contracts contain severability clauses, which allow individual parts of the contract to be deemed unenforceable. Ultimately, it may be up to a court to determine whether an employment contract, or part of an employment contract, is unenforceable.

Employment contracts dictate a specific job, for a specific length of time, at a specific salary, but that does not mean that an employee cannot be terminated before the end of the contract. A few reasons why an employee may be fired include poor work performance (which includes low productivity), regular tardiness, excessive absences, endangering co-workers, and insubordination (i.e. violating company rules, threats of violence, harassment, illegal behavior, lying, and intentionally damaging company property).

Perhaps, your employment contract requires that you maintain a valid commercial driving license, but your license is suspended pending prosecution because you were arrested for driving while intoxicated. Your employer may terminate you because you are not able to uphold your part of the employment contract. They also may deem parts of your previously agreed-upon post-termination contract null and void. If you felt that your employer terminated you improperly, then you could challenge that termination in court and a court would decide whether the employer had good cause.

In a recent Georgia Court of Appeals case, Brazeal v. Newpoint Media Group, LLC a former employee sued, alleging that his former employer owed him severance pay as per the employment contract after the employer decided not to renew his one-year employment contract for another one year term. The court looked at the language of the employment contract and sided with the employer against the employee. The court said that the plain language of the contract only provided severance pay to the employee if the employer terminated the employee without cause prior to the end of the term of the contract. The court decided that the contract made a distinction between a termination without cause and a non-renewal of the contract. They determined that a non-renewal was permitted without triggering a payment of severance to the employee.

As the Brazeal case shows us, courts will thoroughly review payments owed to an employee after a contract is terminated as well as review any restrictive terms. Simply put, courts scrutinize the employment contract negotiated by the employer and employee.