What Are the Key Causes of Employment Termination?

Voluntary and Involuntary Are Common Types of Termination

Employment termination occurs for a number of different reasons.
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Are you interested in the ins and outs of employment termination? Employees land in termination situations for many reasons—some surprise the employer and vice versa. Learn what the main types of termination are and what causes them.

Key Takeaways

  • Voluntary termination is what happens when an employee quits their job.
  • Employees are involuntarily terminated when the employer decides to fire or lay off the employee.
  • "Employment at will" means the employer can end a worker's employment when it wants without providing a cause or explanation.

Voluntary Termination

In a voluntary termination, an employee resigns from his or her job. Resignations occur for a variety of reasons that may include: a new job, a spouse or partner's acceptance of a new job in a distant location, returning to school, an opportunity to take on a managerial role, and retirement. Voluntary termination can also happen when an employee stops showing up for work and doesn't notify management.

Voluntary termination can also occur for less positive reasons. The employee doesn't get along with their boss. They see no opportunity to continue growth and progress in their current company. The job responsibilities in their current job changed and now, they are no longer doing something that they love every day. They have to work every day with a coworker who bullies them in subtle ways that are not outwardly noticeable.

With valued employees, employers expend efforts on employee retention in their aim to limit preventable turnover. This is a significant objective of employers as the cost of employee turnover is expensive.

Involuntary Termination

In an involuntary termination, an employer fires the employee or removes the employee from his or her job. Involuntary termination is usually the result of an employer's dissatisfaction with an employee's performance or an economic downturn. Involuntary termination can also occur in the form of a layoff if the business is unprofitable or overstaffed.

Reasons for involuntary termination of an employee range from poor performance to attendance problems to violent behavior. Occasionally, an employee is a poor fit for the job's responsibilities or fails to mesh with the company's culture. 

Involuntary termination, such as a layoff, can occur because an employer lacks the financial resources to continue an employment relationship. Other events that can trigger an involuntary termination may include mergers and acquisitions, a company relocation, and job redundancy.

With performance problems, the employer most often has tried a few final solutions such as coaching from the employee's supervisor to help the employee improve. Escalating progressive discipline in the case of performance issues such as absenteeism is also the norm. In a final effort to help an employee improve his or her performance, many employers rely on a performance improvement plan (PIP).

Used appropriately, the PIP is the employer’s last-ditch attempt to communicate the needed performance improvements to the employee. But the PIP, and any escalating disciplinary measures, also provide documentation that demonstrates that the employer made an effort to salvage the employment relationship.

Additional Factors in Employment Termination

Several additional factors are relevant to involuntary employment termination, including at-will employment and termination for cause.

Employment at Will

In states that recognize employment at will, an employee may be fired for any reason, at any time, with or without cause. Employers do not even have to give a reason for why the employee is terminated from his or her job.

However, employers are advised to keep documentation for up to a year after termination in the event the employee files a lawsuit.

Termination for Cause

In other instances of employment termination, the employment is terminated for a reason which is given to the employee and stated in the termination letter. Termination for a cause can occur in such situations as:

  • Violation of the company code of conduct or ethics policy
  • Workplace theft or fraud
  • Intoxicated or under the influence of while at work
  • Patterns of incompetence
  • Harassment of other employees or customers
  • Excessive absences and tardiness

Frequently Asked Questions (FAQs)

What are the top two reasons for termination?

Generally speaking, the top two reasons for termination are voluntary and involuntary. In the former, the employee resigns. In the latter, the employer fires or lays off the employee.

What grounds can you dismiss an employee?

Depending on state and federal law, employers can fire employees without cause or reason in at-will employment situations. In cases of termination for cause, an employer might fire someone for constantly being late, harassing employees or customers, or violating the company's code of ethics.

Article Sources

  1. Massachusetts Institute of Technology Human Resources. "Termination—Reasons for Leaving."

  2. Society for Human Resource Management. "Separation of Employment Policy—Procedures for Voluntary and Involuntary (Including Employee Death) Terminations."

  3. Alvernia University. "The Hidden Cost of Employee Turnover."

  4. Society for Human Resource Management. "Involuntary Termination of Employment Policy."

  5. University of Washington. "Involuntary Termination."

  6. Lawrence Berkeley National Laboratory. "Involuntary Termination."

  7. Society for Human Resource Management. "Performance Improvement Plans (PIP)."

  8. Society for Human Resource Management. "What You Need to Know About Termination of Employment."

  9. Equal Employment Opportunity Commission. "Recordkeeping Requirements."

  10. Minken Employment Lawyers. "Termination for Cause—Hard To Prove."