Contract Termination Letters

Written by Helen Glenn Court
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Employees do not, someone once accurately observed, come with a warranty. Hiring is relatively easy as long as you're not a government entity. Firing, on the other hand, isn't, no matter what type of organization you're talking about. There are no definitive rules about terminating employees or consultants. You might have a written employment contract. You might not.

Contract Terminations: Write It Down

Written contracts with consultants are in the best interests of both parties. Contracts with employees are a different matter altogether. The topic bears closer scrutiny, because with a contract to work comes the right, usually for both parties, to stop providing the work or service. But let's look at the advantages and disadvantages, for both sides. Bear in mind also that the employer who tries to fire without a written termination letter might not be standing on firm ground--one reason why a number of employers use professionally created contracts and contract termination letters.

In the first instance, you're an employer. A written contract protects you from the surprise of an employee suddenly leaving (read: you in the lurch). It protects you from competition by that employee if the employee does leave. It also gives you an out if the employee doesn't fulfill expectations (remember that warranty?). In the second instance, you're either an employee or a consultant. A contract protects you from being arbitrarily dismissed for whatever reasons. The legal jargon for this is "covenant of good faith and fair dealing." This is why you want a written contract. Without it, you've no grounds to address what you (or the law) might see as unfairness.

The wording of contracts is a delicate matter. Whether you have received, or are composing, a contract termination letter, the fine print is important. No matter which side you're on, the facts are the same. If you're the employee or consultant, you'll need to refer to the terms of your agreement contract to determine whether the termination is "on just cause." If you're the employer, you need to abide by the terms. The penalties for failing to do so are stiff, and justifiably so.

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