{"id":4694,"date":"2016-04-04T10:47:40","date_gmt":"2016-04-04T15:47:40","guid":{"rendered":"https:\/\/ability-fl-prod.internetbrands.com\/ability-law\/smallbusiness\/employment-law-and-human-resources\/employment-contract-law-firing-an-employee-with-a-contract.html"},"modified":"2026-08-31T10:52:16","modified_gmt":"2026-08-31T15:52:16","slug":"employment-contract-law-firing-an-employee-with-a-contract","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/employment-law-and-human-resources\/employment-contract-law-firing-an-employee-with-a-contract.html","title":{"rendered":"Can You Fire Someone With an Employment Contract?"},"content":{"rendered":"\n<div class=\"fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30  wp-container-core-columns-is-layout-9d6595d7 fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30\">\n<div class=\"fl-section-main fl-page-articles fl-section-main fl-section-main-full-width\"><h1 class=\"fl-no-margin-top\">Can You Fire Someone With an Employment Contract?<\/h1>\n\n<section class=\"fl-gutenberg-byline\">\n    <div class=\"fl-gutenberg-byline-content\">\n                    By <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/catherine-hodder-esq\/\">Catherine Hodder, Esq.<\/a> | Legally reviewed by <a\n                href=\"https:\/\/www.findlaw.com\/company\/our-team\/laura-temme-esq\/\">Laura Temme, Esq.<\/a>\n                | Last updated\n        <time>\n                            August 31, 2026\n                    <\/time>\n    <\/div>\n\n            <div class=\"fl-gutenberg-byline-editorial-note fl-text-sm\">\n            <p>Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n        <\/div>\n    \n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-legally-reviewed\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Legally Reviewed\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>This article has been written and reviewed for legal accuracy, clarity, and style by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\">FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with <a href=\"https:\/\/www.findlaw.com\/company\/company-history\/editorial-policy.html\">our editorial standards<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n\n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-fast-checked\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Fact-Checked\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>The last updated date refers to the last time this article was reviewed by FindLaw or one of our <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html\">contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please <a href=\"https:\/\/lawyers.findlaw.com\/?fli=bylinelink\" target=\"_blank\" rel=\"noopener\">contact an attorney in your area<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n<\/section>\n\n\n<div class=\"fl-key-takeaways fl-mb30\" data-testid=\"fl-key-takeaways\">\n    <div class=\"fl-card-content\">\n        <div class=\"fl-card-body fl-card-bg-teal fl-flex fl-flex-column\">\n                            <h2 class=\"fl-card-title fl-h2 fl-no-margin\">Key Takeaways<\/h2>\n                        <p>You can fire a worker who has an <span data-term-id=\"26341594\">employment contract<\/span>, but the process is often more complex than terminating an <span data-term-id=\"26341636\">at-will employee<\/span>. An <span data-term-id=\"26341594\">employment contract<\/span> is a legally binding agreement that typically requires an employer to have good cause, such as proven misconduct or <span data-term-id=\"26341596\">poor performance<\/span>, before termination. Failing to follow the contract&#8217;s specific terms can lead to a <span data-term-id=\"26341593\">wrongful termination<\/span> lawsuit, making it critical to understand your legal obligations.<\/p>\n\n        <\/div>\n    <\/div>\n<\/div>\n\n\n<div><p>Firing an employee with an <span data-term-id=\"26341594\">employment contract<\/span> is more complex than terminating an <span data-term-id=\"26341636\">at-will employee<\/span>. Employers can terminate <a href=\"https:\/\/www.findlaw.com\/employment\/hiring-process\/at-will-employee-faq-s.html\"><span data-term-id=\"26341636\">at-will employees<\/span><\/a> for almost any legal reason. <span data-term-id=\"26341636\">At-will employees<\/span> also have the same freedom to leave their employment. <span data-term-id=\"26341594\">Employment contracts<\/span>\u00a0can alter this relationship by specifying how and when an employer can terminate an employee.<\/p>\n<p>This article explores different types of <span data-term-id=\"26341594\">employment contracts<\/span> and how they impact an employer&#8217;s ability to terminate an employee. If you\u2019re uncertain about letting someone go, consider <a href=\"https:\/\/lawyers.findlaw.com\/employment-law-employee\/?fli=dcta\" target=\"_blank\" rel=\"noopener\">consulting a local employment lawyer<\/a> to review <span data-term-id=\"26341594\">employment contracts<\/span> and give guidance on legally <span data-term-id=\"26341639\">firing employees<\/span>.<\/p>\n<h2>What Is an <span data-term-id=\"26341594\">Employment Contract<\/span>?<\/h2>\n<p>An <span data-term-id=\"26341594\">employment contract<\/span> is a legally binding agreement between an employer and an employee defining the terms of employment. This agreement governs the <span data-term-id=\"26341635\">employment relationship<\/span> and may include terms covering:<\/p>\n<ul>\n<li>Salary and compensation structure<\/li>\n<li><span data-term-id=\"26341595\">Company policies<\/span><\/li>\n<li>Holidays and paid time off (PTO) procedures<\/li>\n<li><span data-term-id=\"26341610\">Health insurance<\/span> and other benefits<\/li>\n<li>The process for termination, including notice requirements<\/li>\n<li><span data-term-id=\"26341623\">Severance pay<\/span> and <span data-term-id=\"26341624\">final paycheck<\/span> delivery<\/li>\n<\/ul>\n<p><span data-term-id=\"26341594\">Employment contracts<\/span> must conform to state and federal <span data-term-id=\"26341617\">labor laws<\/span>. Drafting clear, compliant contracts with the help of a labor lawyer can help prevent future disputes over <span data-term-id=\"26341593\">wrongful termination<\/span> or a hostile <span data-term-id=\"26341631\">work environment<\/span>.<\/p>\n<h2>Types of <span data-term-id=\"26341594\">Employment Contracts<\/span><\/h2>\n<p>There are three main types of <span data-term-id=\"26341594\">employment contracts<\/span>:<\/p>\n<ul>\n<li>Written (express) <span data-term-id=\"26341594\">employment contract<\/span><\/li>\n<li>Oral <span data-term-id=\"26341594\">employment contracts<\/span><\/li>\n<li>Implied <span data-term-id=\"26341594\">employment contract<\/span><\/li>\n<\/ul>\n<p>Let\u2019s take a closer look at each one.<\/p>\n<h3>Written (Express) <span data-term-id=\"26341594\">Employment Contracts<\/span><\/h3>\n<p>A <a href=\"https:\/\/www.findlaw.com\/smallbusiness\/employment-law-and-human-resources\/pros-and-cons-of-written-employee-contracts.html\">written <span data-term-id=\"26341594\">employment contract<\/span><\/a> is an agreement between the employer and the employee. Ideally, this agreement reflects a negotiation between both parties, reduced to writing.<\/p>\n<p>In a legal action, the court will look at the agreement before making a final decision. For example, if an <span data-term-id=\"26341594\">employment contract<\/span> grants an employee more PTO than other employees, the company must honor this agreement. Both the employer and the prospective employee should seek the counsel of a <a href=\"https:\/\/lawyers.findlaw.com\/employment-law-employee\/?fli=dcta\" target=\"_blank\" rel=\"noopener\">labor or employment attorney<\/a> throughout the negotiation process to protect their rights.<\/p>\n<h3>Oral <span data-term-id=\"26341594\">Employment Contracts<\/span><\/h3>\n<p><a href=\"https:\/\/www.findlaw.com\/legalblogs\/law-and-life\/are-oral-contracts-enforceable\/\">Oral agreements<\/a> are usually valid under the law. If an employer promises an employee during the interview that they won&#8217;t fire them without <a href=\"https:\/\/dictionary.findlaw.com\/definition\/cause.html\" target=\"_blank\" rel=\"noopener\"><span data-term-id=\"26341621\">just cause<\/span><\/a>, most courts will consider that as an established oral <span data-term-id=\"26341594\">employment contract<\/span>. Even a casual conversation can form the basis of an oral <span data-term-id=\"26341594\">employment contract<\/span>. Therefore, employers must exercise caution when speaking to prospective employees.<\/p>\n<p>Courts are willing to uphold oral contracts, even ones based on limited conversations. Examples include:<\/p>\n<ul>\n<li>During an interview, any employer who promises to terminate employment based on <span data-term-id=\"26341634\">job performance<\/span> creates an oral <span data-term-id=\"26341594\">employment contract<\/span><\/li>\n<li>During an evaluation, a supervisor who tells an employee they will have a long career if they keep up good performance may create an oral <span data-term-id=\"26341594\">employment contract<\/span><\/li>\n<\/ul>\n<p>Words matter. It pays to be very careful about what gets said during contract negotiations.<\/p>\n<h3>Implied <span data-term-id=\"26341594\">Employment Contracts<\/span><\/h3>\n<p>Employers and their representatives create <a href=\"https:\/\/www.findlaw.com\/employment\/losing-a-job\/implied-employment-contracts-and-wrongful-termination.html\">implied <span data-term-id=\"26341594\">employment contracts<\/span><\/a> through their actions. Most <span data-term-id=\"26341641\">employee handbooks<\/span> outline the company&#8217;s rules and policies, including when an employee becomes a permanent employee and becomes vested in a pension plan. A court could decide the handbook constitutes an <span data-term-id=\"26341605\">implied contract<\/span>.<\/p>\n<p>An employer who never fires employees unless they literally don\u2019t do their job may have this practice constitute an <span data-term-id=\"26341605\">implied contract<\/span>. An employee can rely on this established practice and honestly believe <span data-term-id=\"26341596\">poor performance<\/span> is the only ground for termination.<\/p>\n<p>Ultimately, a court will determine if an employer&#8217;s actions constitute an <span data-term-id=\"26341605\">implied contract<\/span> and look for evidence of a promise made by the employer. Absent a promise of <span data-term-id=\"26341632\">job security<\/span>, it may be difficult fo the court to rule for an implied <span data-term-id=\"26341594\">employment contract<\/span> between the employer and the employee.<\/p>\n<h2>&#8220;Good Cause&#8221; for Termination Under a Contract<\/h2>\n<p>If an employee has an\u00a0<span data-term-id=\"26341594\">employment contract<\/span>, the employer often needs good cause to terminate employment. Good cause means employers can\u00a0<span data-term-id=\"26341639\">fire employees<\/span>\u00a0only for lawful reasons, such as misconduct. State and <span data-term-id=\"26341611\">federal laws<\/span> protect employees from terminations based on an illegal reason, such as a <a href=\"https:\/\/www.eeoc.gov\/prohibited-employment-policiespractices#:~:text=It%20is%20illegal%20for%20an%20employer%20to%20make%20decisions%20about,)%2C%20disability%20or%20genetic%20information.\" target=\"_blank\" rel=\"noopener\">protected characteristic like<\/a>:<\/p>\n<ul>\n<li>Race<\/li>\n<li>Gender identity<\/li>\n<li>Sexual orientation<\/li>\n<li><span data-term-id=\"26341615\">National origin<\/span><\/li>\n<li>Religion<\/li>\n<li>Disability<\/li>\n<\/ul>\n<p>As a matter of <span data-term-id=\"26341614\">public policy<\/span>, employers cannot <span data-term-id=\"26341642\">terminate employees<\/span> as retaliation for reporting illegal conduct or actions to the <a href=\"https:\/\/www.eeoc.gov\/\" target=\"_blank\" rel=\"noopener\"><span data-term-id=\"26341622\">Equal Employment Opportunity Commission<\/span><\/a> (<span data-term-id=\"26341627\">EEOC<\/span>). For example, a company cannot terminate an employee for filing a <span data-term-id=\"26341608\">sexual harassment<\/span> complaint.<\/p>\n<p>Here are some of the most common examples courts have found are good cause:<\/p>\n<ul>\n<li><span data-term-id=\"26341596\">Poor performance<\/span><\/li>\n<li>General <span data-term-id=\"26341598\">insubordination<\/span><\/li>\n<li>Violating <span data-term-id=\"26341613\">company rules<\/span><\/li>\n<li>Threats of violence<\/li>\n<li>Dishonesty<\/li>\n<li>Habitual lateness<\/li>\n<li>Excessive <span data-term-id=\"26341602\">absences<\/span><\/li>\n<li>Endangering coworkers<\/li>\n<\/ul>\n<p>Under most <span data-term-id=\"26341594\">employment contracts<\/span>, the employer must act in good faith\u00a0and deal fairly with the employee. This requirement is the <span data-term-id=\"26341628\">covenant of good faith<\/span> and <span data-term-id=\"26341626\">fair dealing<\/span>. Consider the following examples:<\/p>\n<ul>\n<li>An employer fires an employee to avoid paying them <a href=\"https:\/\/www.findlaw.com\/employment\/wages-and-benefits\/retirement-benefits.html\">retirement benefits<\/a><\/li>\n<li>An employer fires an employee to avoid paying a sales commission<\/li>\n<li>An employer fabricates evidence of an employee&#8217;s performance to justify firing the employee<\/li>\n<\/ul>\n<p>These demonstrate that the employer acted in bad faith or dishonestly. The courts will likely find a breach of the <span data-term-id=\"26341628\">covenant of good faith<\/span> and <span data-term-id=\"26341626\">fair dealing<\/span>.<\/p>\n<h2>The <span data-term-id=\"26341607\">Termination Process<\/span><\/h2>\n<p>Employers and <span data-term-id=\"26341640\">small-<\/span><span data-term-id=\"26341619\">business<\/span><span data-term-id=\"26341619\"> owners<\/span> should develop a consistent process for <span data-term-id=\"26341599\">employee termination<\/span>. In a <span data-term-id=\"26341603\">termination meeting<\/span>, the employer can attempt to accomplish the following:<\/p>\n<ul>\n<li>Explain the reason for the termination<\/li>\n<li>Review the employee&#8217;s <span data-term-id=\"26341625\">personnel file<\/span><\/li>\n<li>Review the <span data-term-id=\"26341616\">severance package<\/span>, if any<\/li>\n<li>Review the <span data-term-id=\"26341630\">Consolidated Omnibus Budget Reconciliation Act<\/span> (<span data-term-id=\"26341600\">COBRA<\/span>)<\/li>\n<li>Retrieve <span data-term-id=\"26341604\">company property<\/span> from the <span data-term-id=\"26341612\">former employee<\/span><\/li>\n<\/ul>\n<p>Cutting corners or ignoring laws during a termination will almost certainly backfire on an employer.<\/p>\n<h2>Get Legal Help with <span data-term-id=\"26341599\">Employee Terminations<\/span><\/h2>\n<p>Terminating an employee with a contract carries significant legal risks if not handled correctly. An <span data-term-id=\"26341594\">employment contract<\/span> creates obligations that, if breached, can lead to costly <span data-term-id=\"26341593\">wrongful termination<\/span> litigation. A qualified local <span data-term-id=\"26341609\">employment law<\/span> attorney can protect your business by reviewing the specific contract, determining if you have good cause, and advising you on a compliant <span data-term-id=\"26341607\">termination process<\/span>. Speak to an experienced <a href=\"https:\/\/lawyers.findlaw.com\/employment-law-employee\/?fli=dcta\" target=\"_blank\" rel=\"noopener\"><span data-term-id=\"26341609\">employment law<\/span> attorney<\/a> to ensure you are acting within your legal rights.<\/p><\/div>\n\n\n<div class=\"was-this-helpful\">\n    <div\n            class=\"was-this-helpful__question-container\"\n            aria-labelledby=\"was-this-helpful__question\"\n            role=\"group\"\n    >\n        <span\n                id=\"was-this-helpful__question\"\n                class=\"was-this-helpful__question fl-text-lg-bold\"\n        >Was this helpful?<\/span>\n        <button\n                class=\"was-this-helpful__button fl-text-sm\"\n                aria-label=\"Yes\"\n                value=\"yes\"\n        >\n            <span class=\"was-this-helpful__button-text fl-text-bold\">Yes<\/span>\n            <i class=\"was-this-helpful__button-icon\">\n                <svg width=\"22\" height=\"22\" 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