Firing Employees With Employment Contracts
Employment contracts can limit your ability to fire employees.
If an employee has an employment contract -- whether written or oral, express or implied -- that contract may limit your ability to terminate the employee. If an employment contract exists, you must treat the employee fairly and fire the employee only for "good cause." However, it is not always easy to determine if an employment contract exists.
Determining Whether There's a Contract
Before you fire an employee, you must figure out whether you have an employment contract with the employee. Occasionally, this will be as simple as opening the employee's personnel file and seeing a document labeled "employment contract." This type of contract is called an express written contract.
However, employers sometimes create employment contracts without meaning to. This type of contract -- called an implied contract -- binds an employer as much as a written contract does.
Employers create implied contracts when they promise employees something, usually job security. These promises can occur in all sorts of circumstances, such as during a casual conversation with an employee or as part of a discussion in an employee handbook.
No matter how the promise occurs, if a court thinks that the promise has enough weight and that the employee has relied on that promise (usually through continuing employment), the court may view that promise as a contract and require you to hold up your end of the deal.
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