termination for cause
Definition
Termination for cause means ending a contract or an employee's job because the other party did something seriously wrong or failed to meet their obligations. Unlike a regular layoff or early contract exit, this type of termination happens because someone broke the rules, acted dishonestly, or failed to perform their duties in a major way. The party doing the terminating usually does not owe severance pay or other exit benefits when they can prove legitimate cause existed.
Example
If you hire a contractor to build your company's website and they repeatedly miss deadlines and deliver unusable work, you may be able to terminate the contract for cause and avoid paying the remaining balance. The same applies if an employee steals from the register or repeatedly violates your written workplace policies.
Watch Out
You need to document everything carefully before pulling the trigger, because if you cannot prove your cause was legitimate, the other party can sue you for wrongful termination and win.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.