Definition
The term termination for cause refers to an employer severing its relationship with an employee for a specific reason. Termination for cause typically applies to executives that have an employment contract.
Explanation
The vast majority of employees working for a company are "employed at will," which allows both the employee and employer to terminate this relationship at any time and without explanation. That being said, an employer cannot terminate an at-will employee for an unlawful or discriminatory reason.
Executives and the owners of a business may have an employment contract, which normally contains language indicating they are not terminable at-will. Instead, the contract will state the employer can only terminate the executive "for cause." The contract will be very specific in outlining the "for cause" reasons, which may include:
Being convicted of a crime
Disclosing confidential company information or a trade secret
Failing a drug or alcohol test
Falsifying company records
Stealing, lying or embezzling money
Purposefully violating a company policy or procedure
Willful misconduct or insubordination
Note: Individuals that are terminated for cause may not be eligible to collect unemployment compensation and may not be entitled to severance pay. They may also be subject to non-compete agreements following their termination.