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What is Involuntary Termination?

Involuntary termination happens when a company discontinues a worker’s employment. Although the termination may occur due to dissatisfaction with the worker, it can be due to economic decline or a company closing. Company relocation, mergers, and job redundancy are other reasons for involuntary termination.

Involuntary vs. voluntary termination

Unlike involuntary termination, voluntary termination is when a worker chooses to resign. A few reasons for voluntary termination are

  • Finding a new job
  • Beginning retirement,
  • Having to move to a different place
  • Changing job responsibilities

It is standard business practice to provide employers with at least two weeks’ notice of voluntary termination unless the employer and the company make other arrangements.

Causes of involuntary termination

Poor performance, spotty attendance, or misconduct are some of the reasons involuntary termination occurs. If an employee does not handle the job’s responsibilities, they can be fired as well.

Layoffs are another form of involuntary termination. If a company lacks financial resources to pay a worker, the company can terminate employment.

Constructive discharge

Involuntary termination can also be if an employee resigns from the job under circumstances that compels him or her to leave. The legal term for this set of circumstances is constructive discharge.

These circumstances include quitting due to

  • Intolerable conditions in the workplace
  • Experiencing sexual harassment
  • Experiencing discrimination

Sometimes these work conditions occur because the employer is trying to force the employee to quit. However, even if the employer does not intend to force the employee to design, the situation can still result in a constructive discharge.

In these cases, the resigning employee bears the burden of proof. An employee cannot claim a constructive discharge simply because work conditions are stressful. Instead, the work environment must be objectively intolerable. In other words, a constructive discharge claim asserts that any reasonable employee working there would find it impossible to continue their employment under the same circumstances. Most basic harassment cases do not meet the high burden of proof that this claim requires.

Employment in at will states

Some states are called employment at will states. This means an employee may quit without giving any reason. Also, the company can fire an employee without giving any reason. This condition applies unless the worker has a documented employment agreement that specifies the guaranteed amount of time and terms of employment.

Protecting company interests

Even in an at-will state, companies should document terminations to defend against discrimination lawsuits. Although there may be no official reason presented upon termination, listing specific reasons in the employee’s record can help the company prove the firing or layoff was lawful.

Protecting employee interests

When employees work in an at will state, the employer must still follow federal non-discrimination guidelines. Employees cannot be fired characteristics like their religion, gender, or race. The law also prohibits companies from firing someone for reporting illegal activities like discrimination, harassment, or health and safety violations. Employees also have the right to keep their jobs when they must take family or medical leave, military service leave, or perform jury duty.

Employers policy and procedures

Companies should have policies and procedures in place for terminating employees. These policies guide the company in how to handle different reasons for termination. The policies also help to make sure any terminations are handled in a consistent and uniform way.

Departmental managers and the human resource department of the company should approve the termination guidelines. Each termination should follow the process laid out per policy provisions.

Compliance areas

Compliance in the business world typically applies to two categories.

  1. Compliance of the employee
  2. Compliance of the business to employment laws

If employees do not comply with state and federal requirements, the company may have cause to terminate their employment. If the business does not comply with the same standards, a terminated employee may have grounds for an unlawful termination suit.

Employee compliance

Usually, companies address employee compliance issues through compliance training. It helps the worker understand company policies in interacting with coworkers. It should cover such things as safety training, sexual harassment guidelines, and anything regarding a specific type of business practice.

Business compliance

The business is obligated to follow any state or federal laws regarding termination processes and training for employees regarding ethical ways to behave. This helps the company prevent possible audits, lawsuits, and fines.

Some businesses require signatures on termination documents, employee warnings, and employee training completion. If or when the company fires an employee, the signatures help prove that the business met its obligations.

Terminating for cause

If a worker is fired for a reason regarding misconduct, it is called Termination for Cause. The reason is usually written in a termination letter.

Some examples of terminating for cause are the employee

  • Not following company policy
  • Participating in violence or threatened violence
  • Being insubordinate
  • Harassing others
  • Falsifying records
  • Stealing or destroying company property
  • Possessing or using illegal drugs while on business premises
  • Drinking alcohol just before arriving or while at work
  • Bringing unauthorized weapons to work
  • Participating in any criminal activity

Although the company may issue warnings or require additional training for some infractions, others may be grounds for immediate termination of employment.

Termination procedure

Often the worker will get a warning regarding behavior against company policy. The company may also counsel the employee to change the behavior. It the worker continues the behavior the company may give extra disciplinary action up to and including termination.

The company should document any warning or counseling they issue to an employee in writing. This includes an employee signature acknowledging they are aware of the action the business is taking. If involuntary termination is the solution, the company should give the worker the reason why they are being fired.

Conducting an exit interview

An exit interview often takes place upon termination of employment from larger businesses or corporation, though small businesses sometimes do them as well. The interview usually is handled by the human resource department. In some cases, the manager or owner does the exit interview.

The interview serves two purposes.

  1. It helps a business to get information that is useful for improving employee relations.
  2. It offers the employee information about things such as insurance continuance or severance, 401k transactions, and when the worker will receive their final paycheck or anything else they are due.

What happens after involuntary termination?

Upon involuntary termination, the employee may be granted certain things depending on the cause of termination. The terminating company often approaches each situation on a case by case basis.

State or federal laws play a role in the requirements for the termination. For example, depending on the reason for termination, an employee may qualify for unemployment benefits.

With involuntary termination without cause such as a layoff, the employee may be offered a severance package. The severance package may include severance pay and any financial investments the worker made through the company.

COBRA insurance

Upon termination, some workers are offered an option of COBRA (Consolidated Omnibus Budget Reconciliation Act) insurance coverage. The law requires COBRA coverage when a business has at least 20 employees.

Continuing coverage

If a worker loses coverage through the company’s group health plan when they are involuntarily terminated, they may temporarily continue coverage if they can afford it. COBRA typically offers a reduced price for the insurance premium.

Involuntary termination covers several different aspects, including reasons for termination and whether the company follows legal guidelines for the procedure. Pay attention to your legal rights as well as your company’s procedures. Being mindful of what needs to happen during an employment transition can keep you from being caught off guard.

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