What Does Termination of Employment Mean?

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What Is Termination of Employment?

The termination of employment refers to the end of an employee’s work with a company. An employee may be terminated from a job voluntarily or following a decision made by the employer. Employers may terminate employment for various reasons, including downsizing, poor job performance, or redundancies.

An employee who is not actively working due to illness, leave of absence, or furlough is still considered employed if the employment relationship has not been formally terminated with a notice.

Key Takeaways

• Termination of employment refers to the end of an employee’s work with a company.
• Termination may be voluntary.
• Involuntary termination occurs due to downsizing, layoffs, or firing.
• Severance packages are discretionary.
• Unemployed individuals may be eligible for unemployment benefits.

How Voluntary Termination Works

An employee may voluntarily terminate their employment with a company at any time. They may do so when they find a better job, retire, start their own business, or take a break from working.

Voluntary termination can also be a result of constructive dismissal, where the employee leaves the company due to significant duress and difficult working conditions.

Forced discharge, giving an ultimatum to quit or be fired, also falls under constructive dismissal. If the employee can prove unlawful actions by the employer during their tenure, they may be entitled to compensation or benefits.

An employee who voluntarily leaves an employer may be required to provide a resignation notice, either verbally or in writing. Most industries usually require a two-week notice. In some cases, the employee gives notice at the time of termination or gives no notice at all, such as when an employee abandons the job or fails to return to work.

If your employment changes due to a change in hours, layoff, or termination, you may qualify for COBRA health insurance coverage under your existing plan for 18 months. If you choose to continue under the same plan, you are responsible for the full premium each month.

How Involuntary Termination Works

Involuntary termination of employment occurs when an employer lays off, dismisses, or fires an employee.

Layoffs and Downsizing

In a layoff, employees are usually let go through no fault of their own. Companies decide to lay off workers or downsize their organizations to lower operating costs, restructure, or due to a lack of need for certain skill sets. Layoffs may be temporary or permanent based on restructuring decisions.

Getting Fired

An employee is usually fired as a result of unsatisfactory work performance, bad behavior, or a poor fit with the company’s culture. They may also be fired for unethical conduct that violates company policies.

Under at-will employment laws, a company may dismiss any employee who is performing poorly or violating company rules without warning or providing a reason for termination.

Illegal Dismissals

An employer cannot fire a worker for certain reasons, such as refusing to work beyond contract hours, taking a leave of absence, reporting incidents to the HR department, or whistleblowing to industry regulators. Firing an employee for these reasons is unlawful and may result in wrongful termination lawsuits.

Other illegal dismissals occur when an employer fires an employee based on discriminatory reasons such as religion, race, age, gender, disability, sexual preference, or nationality. Employers found guilty of wrongful termination may be required to compensate the employee and reinstate them.

Termination for Cause

An employer may fire an employee for a specific cause. A termination-for-cause clause typically includes putting the employee on an improvement schedule of 60 or 90 days. If the employee does not improve, they could be terminated for cause.

In some cases, an employer may dismiss an employee without prejudice, indicating that the employee was let go for reasons other than incompetence, insubordination, or misconduct. In such situations, the employee may be rehired for a similar job in the future.

Termination Compensation

Some employers provide employees with severance pay when they are involuntarily terminated. Severance pay is offered following a private agreement or specified in the employee handbook, although it is not required by federal law under the Fair Labor Standards Act (FLSA).

Employers are not required by federal law to provide the terminated employee with a final paycheck immediately. State laws may differ and may require immediate provision of the final paycheck, including accrued and unused vacation days.

Unemployed individuals may be eligible for unemployment benefits. Each state administers an unemployment insurance (UI) program to offer temporary financial assistance to people who are unemployed and seeking a job. The U.S. Department of Labor (DOL) provides detailed information about unemployment insurance benefits.

The last day with your employer is commonly referred to as your end, separation, or termination date.

Is Getting Terminated the Same as Getting Fired?

If you are fired, you are terminated from your employment. The reason for termination depends on the employer, who should provide an explanation. Employees may be fired for misconduct, poor performance, or if they are not a good fit for the position or company.

What Are the Main Reasons For Getting Fired?

Employers may fire employees for misconduct, poor job performance, violation of company policies, theft, damage to company property, use of company materials for personal matters, insubordination, excessive unjustified sick days, or consistent lateness.

Some employers include moral clauses in employment contracts, which hold employees to certain standards both in and outside the workplace. Social media activity that goes against these standards may be cause for firing.

What Is Wrongful Termination?

Wrongful termination occurs when an employee is let go for reasons prohibited by employment law, such as discrimination, whistleblowing, or retaliation.

Employers who fire employees for not complying with certain requests, such as performing dangerous or illegal work, are also guilty of wrongful termination. Changing working conditions without notice and ultimately forcing an employee to leave or be fired is also seen as a violation of employment laws.

Wrongfully terminated individuals may pursue legal action against their former employers.

How Do You Fight Termination of Employment?

If you believe you were terminated without just cause, there are steps you can take.

First, make sure you understand the reason for your termination. If possible, appeal the decision with your employer or the company’s HR department. Request copies of relevant documents, including your employment contract, communications regarding your performance, and your employment file. If you have a union, contact your representative. You can also consult an employment lawyer to take your case to court if necessary.

The Bottom Line

Employees and employers end their relationship for various reasons. Some employees leave voluntarily, while others are let go due to misconduct, poor performance, or other reasons.

If you were terminated, you have certain rights. For instance, you have the right to rescind your resignation if you choose to leave voluntarily. You also have the right to file an unemployment insurance claim if you lost your job through no fault of your own. If you believe that your employer retaliated against you or terminated you illegally, you may have legal recourse. Consult an employment lawyer to determine the best course of action.