One of the unpleasant parts of any business is the occasional need to terminate employees. Employee termination can stem from many reasons, including poor performance, a need on the employer's part to cut costs, corporate restructuring and violations of workplace policies. In each case, the employer may choose to disclose the reason for termination. However, doing so can have unintended consequences.
Employers are bound by the union contracts they agree to and the employment agreements they sign when they hire workers. When an employment agreement exists, it may include provisions for disclosing reasons for termination. If the contract also prohibits termination for certain reasons, the disclosure requirement ensures that an employer has a valid reason for firing an employee. Disclosure requirements also help prevent wrongful termination based on discrimination, which is illegal under federal laws, namely the Civil Rights Act of 1964.
Disclosing reasons for termination can be dangerous for employers who do so casually and without consulting legal experts. If an employer voluntarily discloses a reason for termination that violates an employment contract, he may face civil penalties for wrongful termination. The same issue applies if an employer admits to terminating an employee due to race, gender, ethnicity or religion. Employers can avoid these issues by using a standard termination letter that includes a list of lawful reasons for termination. Companies may also wish to prevent supervisors from disclosing reasons for termination in any form other than the official letter, as a matter of policy.
Besides disclosing a reason for termination to the employee being fired, an employer can also disclose the reason to outsiders within the boundaries or limitations of an employment contract. If you lack a contract and apply for a new job, your prospective employer may contact your former employer to request information about your reason for termination, salary history and overall performance. This means that you must include a truthful reason for leaving your former job on your resume and employment applications, since there's nothing to stop your former employer from disclosing the reason for your termination.
In some cases, an employer will disclose reasons for termination incidentally rather than through any formal notification process. For example, an employer facing financial difficulty may announce impending layoffs to cut costs and reduce payroll. The announcement may include information about criteria for the layoffs, such as performance, redundancy or seniority. Workers who receive termination notices shortly after such an announcement will have a general understanding of the reasons for their termination.