In this video blog post, shareholder Ericka Adler explains what employers need to know before terminating an employee for breach. She discusses how to evaluate whether conduct actually violates the contract, notice and cure requirements, common pitfalls, and when terminating without cause may be the better option.
Click HERE to watch the video blog post.
Video Blog Transcript:
Hi everyone, this is Ericka Adler, shareholder and leader of the healthcare practice at Roetzel & Andress. Today, I want to talk to you about terminating an employee for a breach of contract. This is something that can be tough to do, so you need to make sure you understand the practice's rights and obligations.
First, make sure you're looking at your actual employment agreement with the employee. Has the conduct of the employee actually breached the agreement? A lot of times, clients will call me and say, “I want to terminate this employee for breach,” but when we look at the grounds for termination, it doesn't appear that the events that have occurred quite rise to the level of a breach.
However, if it's something that the employer feels strongly about, we may consider amending the agreement to make sure that the type of event that occurred is considered a breach going forward.
Under the current contract, it may not be possible to terminate for breach based on the events that occurred. It's important to look at the other provisions of the agreement, just to make sure that whatever is being alleged may not fall under a different provision that allows for termination.
What if the employee can be terminated for something that occurred? What are the next steps?
Well, if the provisions require that notice and an opportunity to cure be given, then a written notice must be provided to the employee. Remember, the employer must follow the notice requirements in the employment agreement to make sure that notice of the breach is properly given. That notice should include the detail about what has occurred and the timeframe for the breach to be cured.
If the breach is not cured, then the contract will be terminated at the end of the cure period. If the breach is cured, then the contract will stay in place.
This can be frustrating to employers sometimes, which is why it's important when you're drafting an agreement to consider, are there more breaches where the employer wants a right to be able to cure? Do we give an opportunity to cure more often than the employer would actually like? Do we give too many chances to cure a breach? Should there only be one opportunity to cure this same breach, so we don't get into a pattern of cure, breach, cure, breach, and we can never terminate someone?
Also, it's important to remember that if you have an employee who you think is likely to challenge you, even if you feel you have grounds for termination for cause, it may be worth considering just terminating without cause. When you terminate without cause, you don't need to give a reason, you don't need to give opportunities to cure a breach, you don't have to deal with repeated breaches. The contract will just end when the notice period ends.
So, this is something that's important to consider. If you haven't reviewed your contracts in a while, it's a good idea to take a look at the list of grounds for termination for cause, and to talk with your counsel about whether they're written properly, they're written in a thorough manner, whether you've had some ideas or experiences with employees in your practice that have given you some additional thoughts on what you want to include in that list.
Remember, your lawyer can include some standard provisions that tend to work quite well, but once you've had some specific experiences with the employees in your practice and the type of situations that arise, you may want to add to that list to make it work for your practice better.
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