Ramsey Williams Case 83: The Broken Employment Contract?

2/16/05 Human Resource Management Shawn Keough

Case 83: The Broken Employment Contract?

Arthur Wayne was asked to resign after working five years at EcoCare as assistant to the company treasurer, Sara Bell. The reason Bell terminated Waynes was his mishandling of the company car program. Although, several complains had been issued, Wayne felt like this was not good cause for termination, and stated he had an implied contract for continued employment. He also maintained that proper procedures were not followed regarding his termination. He asked for his termination to be reviewed by the president and the board of trustees. In preparation for this review the director of human resources made a report reviewing Waynes personnel records. He also interviewed Wayne and his supervisors. Wayne may have indeed had an implied contract*, depending on state laws and rulings regarding oral agreements. Wayne was employed with EcoCare for five years, which demonstrates a significant length of service. EcoCares own policy is to discharge for just cause only. Combined with the way that EcoCares polices regarding discipline and termination re set up, Wayne has a strong case for a contract. The problem was determining if he was terminated without good cause. EcoCare should have a more structured pre-employment process. The interview described in the case implied that Waynes immediate supervisor outlined his employment terms; there is no mention of official written contract pertaining to employment.

An employers written human resource policies can be construed as a contract between employer and employee. Policies and procedures exist to insure that all situations are handled uniformly. This is in part to help cover the employer from accusations of discrimination and wrongful termination, and to act as assurance to the employee that these situations will be handled a specific way determined before hand. In Arthur Waynes case, EcoCares human resource policies were not followed. The just cause behind his termination remains in question. A verbal exchange about the problem was made, but, as far as the case states, no written warning regarding his personality conflicts with other workers was issued. No progressive steps were made to try and correct the problem or discover the discrepancies with the odometers, nor progressive discipline employed to correct Waynes behavior. Wayne should have been placed on suspension while an investigation into the company car program was conducted. It is likely that such an investigation would have uncovered good cause for Waynes termination, and pre determined policies would have been followed. The only claim that Bell could have made for Waynes immediate termination was his defensive and insubordinate behavior when asked about the company car program. The policies state that insubordination is grounds for immediate termination. Also, Bell asked Wayne to resign, this is technically different from a termination, so Bell may have been trying to get around following procedures for Waynes termination.

EcoCare should reacquaint its managers with its own policies and procedures regarding discipline and termination in order to prevent future claims of wrongful discharge. And perhaps rethink these procedures to better fit with practical concerns. Also, a formal contract for all employees defining term of employment and renewal options should be implemented in the pre employment process to prevent ambiguity.

*Reference: implied contract http://www.discriminationattorney.com/oral_imp_cont.shtml