Understanding “Notice and Cure” Provisions in Employment Contracts

Although Texas is an “employment at-will” state, some companies utilize employment contracts with increasing frequency.  Many of those employers include a “notice and cure” provision in their employment contracts. When a “notice and cure” term is included in an employment contract, the agreement includes a length of time during which a problem, or potential terminable event, can be corrected before termination.  When the consequences of inadequate individual performance are spelled out, companies may find their entire organization operates more effectively. Identifying specific shortfalls in performance and allowing for their correction prior to termination can prove to be beneficial for everyone.

Notice and cure clauses usually operate hand in hand with provisions about termination “for cause.” Generally, whenever an allegation against an employee yields a question of continued employment, the employment contract will dictate whether the acts committed by the employee could be deemed “for cause” acts. Termination for cause can happen for any actions an employer may consider wrongdoing. However, when a definition of “for cause” includes something the employee could change, there can be an additional “notice and cure” provision within the contract. 

Take, for example, an employment contract that dictates an employee may be fired “for cause” for failing to completely or adequately perform assigned duties. This contract could also include provisions requiring 1) written notice to the employee after the alleged work performance failure and 2) a predetermined period of time during which the employee can correct the problem.

Another example is the situation of failing to follow an order or failing to perform a specific instruction.  Again, language allowing for a notice and cure could include a definable period of time allowing the employee to correct the initial refusal. Ultimately, the intent of a “notice and cure” provision is to enable the employee to correct something that might otherwise lead to termination “for cause.”

“Notice and Cure” can Decrease Your Company’s Termination Liability 

When a company includes practices that require “notice and cure” provisions before termination, it becomes more difficult for the employee to allege that the employer abused its discretion in the “for cause” termination and it becomes more difficult for the employer to challenge that portion of the employment contract.  When a company orders that the employee cure inadequate or incomplete work requirements, there is little doubt why or when termination will occur if the issue has not been corrected. Furthermore, being able to articulate a good reason for the employee’s termination can be helpful in maintaining your company’s reputation. 

Employment Lawyers Can Help Develop Your Company’s Policies

Hiring experienced lawyers to develop termination policies and employment contracts can increase stability within your business. The attorneys at Simon | Paschal PLLC are not just  employment law experts; we are also business owners who understand what works best for companies of differing sizes and with differing goals. 

Contact us today to learn more about including “notice and cure” provisions within your employment contacts and how these clauses can help you hire and retain the most qualified employees.

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