What is the Difference Between Termination With Cause and Termination Without Cause?

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Employees always question what it means to be Terminated With Cause versus Terminated Without Cause. The quick response, is that a Termination With Cause generally means that an employee engaged in some kind of misconduct whereas a Termination Without Cause is based upon a decision of the employer to end the employee’s employment.

Terminations With Cause generally occur in some of the following situations, including among others:

  • violations of company policy
  • insubordination
  • fraud
  • embezzlement
  • conviction of a crime
  • violence or threated violence at work
  • falsifying records

At times, Company’s try to claim that performance can be a reason for a Termination with Cause. However, poor performance or not meeting expectations is not necessarily Cause (i.e. gross misconduct) as defined above, but can be used to deny an employee benefits or severance that the employee may be entitled to receive had the employee been terminated without cause. Sometimes, employees who are about to be Terminated With Cause may be given the option to resign from the job.

Termination with Cause has substantial ramifications and could result in an employee losing stock options, equity, deferred compensation, severance, bonuses, unemployment benefits, etc.

Termination Without Cause is how most employees are terminated, as most employees are at-will employees. Examples of Termination Without Cause are layoffs, reductions in force, job eliminations, downsizing, etc. Terminations Without Cause generally afford employees with all the benefits an employer has promised through contracts and policies. Many employees Terminated Without Cause also receive severance benefits.

Regardless of whether an employee is Terminated With Cause or Terminated Without Cause the employee is still obligated to adhere to contracted restrictions on the employee’s future employment, including, Non-Compete Agreements, Non-Solicitation Agreements, Workplace Invention Agreements, Confidentiality Agreements, etc. Understanding what you may be entitled to receive when you are terminated may be confusing. Click here to schedule a time to speak with Sheree Donath to discuss your employment situation and to obtain guidance on your specific situation or if you believe you may be terminated soon.