What Is Termination of Employment?

What Is Termination of Employment?

Let me explain termination of employment directly: it's when your work with a company comes to an end. You might choose to leave on your own, or the employer could decide for you. Employers terminate for reasons like downsizing, poor performance, or redundancies.

If you're not working due to illness, a leave of absence, or furlough, you're still employed unless there's a formal notice of termination.

Key Takeaways

Termination means the end of your work with a company. It can be voluntary if you leave by choice. Involuntary happens when the company downsizes, lays off, or fires you. Severance is optional—no company has to offer it. If you're unemployed without fault, you might get unemployment benefits.

Voluntary Termination

You can voluntarily end your employment anytime. This often happens when you find a better job, retire, start your own business, or just need a break.

Sometimes voluntary termination stems from constructive dismissal, where you leave because conditions make it impossible to stay. Think of things like a new location too far to commute, longer hours, low pay, or harassment.

If you're forced to quit or face firing, that's also constructive dismissal. Prove the employer's actions were unlawful, and you might get compensation or benefits.

When you resign voluntarily, hand in a notice—verbal or written. Most managers want at least two weeks so you can wrap up tasks and they can find a replacement.

Important Note on Health Coverage

If your employment changes from reduced hours, layoff, or termination, you could qualify for COBRA to keep your group health plan for 18 months. You'll pay the full premium yourself.

Involuntary Termination

This is when the employer lays off, dismisses, or fires you.

Layoffs and Downsizing

In layoffs, you're let go without fault, unlike being fired. Companies do this to cut costs, restructure, or because they don't need your skills anymore. Layoffs can be temporary, like during COVID-19, or permanent from restructuring.

Dismissed (Fired)

You're usually fired for poor performance, bad behavior, or an attitude that doesn't fit the company culture. Unethical conduct violating policies can also lead to this.

In at-will states, companies can fire you without warning for poor performance or rule violations—no reason needed.

Illegal Dismissals

Even with at-will employment, employers can't fire you for refusing unsafe work, taking leave, reporting to HR, or whistleblowing.

You can't be fired for these; it's unlawful, and the employer could face wrongful termination liability.

Other illegal reasons include discrimination based on religion, race, age, gender, disability, sexual preference, or nationality. If guilty, the employer might pay compensation or reinstate you.

Termination for Cause

Beyond at-will, employers can fire for specific cause. This involves a 60- or 90-day improvement plan. Fail to improve, and you're terminated with prejudice—no rehire possible.

Sometimes dismissal is without prejudice, meaning not due to incompetence or misconduct, so you could be rehired later.

Mutual Termination

This is when you and the employer agree to end the relationship. It's better than involuntary termination, easing the emotional impact. It could be forced retirement, resignation, or no contract renewal.

Termination Compensation

Some employers give notice and severance pay, common after three months of work in involuntary terminations. It's per agreement or handbook, but not required by FLSA.

Your last day is your termination date. Federal law doesn't require immediate final paychecks, but states might, including accrued vacation.

If unemployed without fault, you can get unemployment benefits. States run UI programs for temporary aid while job hunting; check the DOL for details.

Fast Fact

The last day with your employer is commonly called your end, separation, or termination date.

Is Termination of Employment the Same as Getting Fired?

Yes, termination is the same as getting fired.

What Are the 3 Types of Termination of Employment?

The three types are involuntary, voluntary, and mutual termination.

How to Handle Employment Termination?

As an employer, document past issues leading to termination. In the session, be direct, compassionate, and quick to remove the ex-employee.

The Bottom Line

Employees and employers end relationships for many reasons—you might leave voluntarily, or be let go for misconduct or performance.

If terminated, you have rights: rescind resignation if voluntary, file for unemployment if no fault. If it's illegal retaliation or discrimination, consult an employment lawyer for recourse.