The term unfair dismissal (or discharge) describes those instances where an employer illegally chooses to terminate (including a constructive discharge, forced resignation, elimination of the job, permanent layoff, or failure to recall or rehire) the employment of an employee. There are a number of factors to take into account in attempting to determine whether the dismissal of an employee is illegal. Many of the issues relating to unfair dismissal depend on whether the employee is working under an employment contract or not. In situations where the employee has an employment contract, questions may arise as to what constitutes “good cause,” “just cause,” or simply “cause,” under the terms of the contract. The law provides that an employment contract for a definite term may not be terminated without cause before the expiration of the term, unless the contract provides otherwise. Where a union is involved, collective bargaining agreements generally contain prohibitions on discharge except for just cause. However, courts in nonunion situations have generally ignored the extensive body of arbitration agreements that have addressed this situation in collective bargaining.
If the employee does not have an employment contract, the so-called at-will doctrine applies. Under the modern interpretation of this doctrine, absent an agreement to the contrary, the common law gives employers the legal right to dismiss employees without having a good cause, or any cause at all, except if one of the exceptions to the doctrine applies. These exceptions are (a) the termination was contrary to an important public policy, (b) the employer broke an implied contract of continued employment, or (c) the termination violated an implied covenant of good faith and fair dealing.
PUBLIC POLICY EXCEPTION
The major exception to the at-will doctrine is the public policy exception. Courts have typically held that it is illegal, even where employment is for an indefinite term, for an employer to discharge an employee when the employer's intent is to violate an important and clearly mandated public policy. The public policy exception is generally interpreted narrowly. So, for example, as set forth in Stephenson v. Litton Sys., Inc., (646 N.E. 2d 259), an employee who was discharged for reporting to police that it was likely that his or her superior was going to be driving while intoxicated was illegally discharged in violation of the public policy exception, since the policy was sufficiently clear and compelling and the employee had a reasonable basis for their suspicion. The policy involved must be clearly defined and involve an important public purpose and not merely a private or proprietary interest. Courts try to balance the interests of employers, employees, and public. Not all socially desirable duties are protected. A discharge is not illegal merely because an employee's conduct is praiseworthy or because the public may have derived some benefit from it. The infringement must be a substantial one on an important public policy.
Public policy may be found in state or federal constitutions, statutes, regulations, judicial decisions, and sometimes in ethical ...