2010

Termination of Employment

Submitted To: Dr. Rajasi A. Clerk H.O.D. M.L.W. Dept. Gujarat University

Group - Endeavour
Junior M.L.W.
Termination of Employment 1/11/2010

INDEX

Sr. Roll No. No.

1 2 3 4 5 6 11 07 21 40 35 23

Name
Richard B. Macwan Kuldipsinh A. Jadeja Paresh I. Patel Munjal Bhatt Irina R. Varsat Vishal S. Pathak

Topic
Sources of Regulation & General overview Definition & Types of Termination Termination attributable to the employee Judicial stand in India on Termination of Employment Termination of Employment under Closure Acts of Misconduct under the Industrial Employment (S.O.) Act, 1946 Separation of Employment Case study of Mr. Nagpal Case study of Mr. Sawhney vs. J. K. Industries Employment Termination Agreement

Page No.
2 5 8 10 12 13

7 8 9 10

08 37 20 02

Mayur G. Jethva Anupama I. Yadav Nitin T. Patel Priyanka G. Chaurasiya

15 17 21 22

Termination of Employment

Topic: Sources of Regulation & General overview Presented by: Richard B. Macwan

Sources of Regulation:
The main statutes which regulate termination of employment are the Industrial Employment (Standing Orders) Act (IESA), 1946, and the Industrial Disputes Act (IDA), 1947, as amended. Termination of employment: The contract of employment can terminate, not at the initiative of the employer, in certain circumstances, including by: 1) 2) 3) 4) Mutual agreement Resignation by the employee Employees retirement; and The expiry of a fixed-term contract.

Dismissal: The law relating to termination of employment in India distinguishes broadly between three different situations: Dismissal for misconduct, discharge and retrenchment. Indian law starts from the common law premise that an employer has a right to terminate the services of an employee without giving a reason. However, this position has been affected by legislative intervention and by the development by the courts of natural justice requirements. As regards termination of employment for disciplinary reasons, some instances of misconduct which may justify dismissal without notice and any compensation in lieu of notice are listed in the Model Standing Order (MSO) and include (Sec. 14 (2)-(3), MSO): 1) 2) 3) 4) 5) 6) Willful insubordination or disobedience; Theft, fraud or dishonesty; Willful damage or loss of employers property; Bribery; Habitual lateness or absence; and S Striking unlawfully.
2

Termination of Employment

Termination of employment is unlawful if it is for reasons related to trade union membership or activity; filing complaints concerning the employer; race, color, sex, marital status, pregnancy, religion, political opinion or social origin. In addition, termination of employment in violation of fair labour practices as defined by legislation or case law will not be valid. The IDA (Fifth Schedule) lists some practices which will be considered to be Unfair Labour Practices. These include dismissal on account of trade union activity or membership; dismissal by way of victimization; dismissal not in good faith but in the colorable exercise of the employers rights; dismissal by falsely implicating a worker in a criminal case or on false or trumped-up allegations of absence without leave, dismissal without due regard to natural justice or for minor misconduct leading to disproportionate punishment. The Maternity Benefit Act, 1961, provides that absence from work during maternity leave, as allowed under the statute, should not be considered as a valid reason for termination of service. Similarly, employees may not be dismissed or discharged while they are in receipt of a sickness benefit or disablement benefit for temporary disablement or are receiving medical treatment for sickness or are absent from work as a result of certified illness arising out of pregnancy (Sec. 73, Employees State Insurance Act). Notice and prior procedural safeguards: Under the Industrial Employment (Standing Order) Act, employers are required to give in writing one months notice or payment in lieu of such notice in order to lawfully terminate the employment of permanent monthly-paid workers. The two weeks notice is required for workers paid on other basis. Notice is not required either for probationers, badlis or temporary workers (Sec. 13, MSO). Notice is not required for workers found guilty of serious misconduct such as would constitute summary dismissal. In case of dismissal on disciplinary grounds, the worker must be given an opportunity of explaining the charges of misconduct alleged against him/her (Sec. 13(2), MSO). Avenues for redress: Since the 1965 amendments to the IDA (Sec. 2A), the dismissal or retrenchment of an individual is deemed to be an industrial dispute, hence the ability of a worker to take his or her claim to the Labour Courts. Under Sec. 2
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(a) of the IESA, a worker dissatisfied with his or her termination of employment is entitled, in the first instance, to raise the matter as a labour dispute with an officer from the conciliation department of the Ministry of Labour. The officer will attempt to conciliate the matter and must submit a report to the Government if conciliation fails, pending a decision from the governmental authority on whether the matter merits adjudication before the Labour Court or Tribunal. Challenges to dismissal can be made to the Labour Court under Sec. 11A of the Industrial Relations (Amendment) Disputes Act, 1971. The Labour Court may review a termination of employment and set aside a dismissal if it decides that the dismissal was not justified. No time limit is prescribed within which an aggrieved worker may raise a labour dispute. However, excessive delay may prejudice a workers case. The burden of proving that dismissal was for a valid reason rests with the employer. The Labour Court, Industrial Tribunal and National Tribunal have wide discretion to review disputes relating to termination of employment, including the examination of the evidence, and to award relief as they see fit including compensation in the form of damages and reinstatement (Sec. 11A, IDA). Before reinstating an employee, the judicial body will inquire into the feasibility of reinstatement; for example, whether the employee has lost confidence in the employer and whether industrial peace and harmony will be threatened.

Termination of Employment

Topic: Definition & Types of Termination Presented By: Kuldipsinh A. Jadeja

Definition of Termination of Employment:

Termination of employment is the end of an employee's duration with an employer. Depending on the case, the decision may be made by the employee, the employer, or mutually agreed upon by both.

Types of Termination:
There are three types of termination. They are as follows: 1) Voluntary termination: Voluntary termination is a decision made by the employee to leave the job. Such a decision is commonly known as resignation, quitting, leaving or giving notice. Some common reasons for voluntary termination include:  Personal dissatisfaction with the job, employer, hours, or working conditions, or in more severe cases, burnout.  Factors in employees personal life not related to the jobs that make holding or performing the job impossible or more difficult. These may include family obligations, education, health, or moving to a new location.  Hire at a new job. Reasons for wanting a different job may be better working conditions, better hours, a shorter distance to work, better pay, graduation, career progression or preparation for entry into a new career, or a career change.  Feared or anticipated involuntary termination. The employee may wish to take matters into his/her own hands in order to leave more honorably. This is also known as mutual consent in some parts.  Retirement. This may be as a result of the employees age (which may vary, depending on job type and benefits available following retirement) or else an injury, disability, or other medical condition forcing early retirement.

Termination of Employment

2) Involuntary termination: Involuntary termination is the employee's departure at the hands of the employer. There are two basic types of involuntary termination, known often as being "fired" and "laid off." To be fired, as opposed to being laid off, is generally thought of to be the employee's fault, and therefore is considered in most cases to be dishonorable and a sign of failure. Often, it may hinder the new job-seekers chances of finding new employment, particularly if he/she has been fired from earlier jobs. Job-seekers sometimes do not mention jobs which they were fired from on their rsums; accordingly, unexplained gaps in employment and refusal to contact previous employers are often regarded as red flags.  Dismissal Dismissal is the employer's choice to let the employee leave, generally for a reason which is the fault of the employee. The most common colloquial term for dismissal in America is being terminated whereas in Britain the term 'getting the sack' is used.  Layoff A less severe form of involuntary termination is often referred to as a layoff (also redundancy or being made redundant in British English). A layoff is usually not strictly related to personal performance, but instead due to economic cycles or the company's need to restructure itself, the firm itself is going out of business, or due to a change in the function of the employer (for example, a certain type of product or service is no longer offered by the company, and therefore jobs related to that product or service are no longer needed). One type of layoff is the aggressive layoff. In such a situation, the employee is laid off for a just cause, but not replaced as the job is eliminated. 3) Termination by mutual agreement: Some terminations occur as a result of mutual agreement between the employer and employee. When this happens, it is sometimes debatable if the termination was truly mutual. In many of these cases, it was originally the employer's wish for the employee to depart, but the employer offered the mutual termination agreement in order to soften the firing (as in a forced resignation). But there are also times when a termination date is agreed upon before the
Termination of Employment

employment starts (as in an employment contract). Some types of termination by mutual agreement include:  The end of an employment contract for a specified period of time (such as an internship)  Mandatory retirement. Some occupations, such as commercial airline pilots, face mandatory retirement at a certain age and  Forced resignation etc.

Termination of Employment

Topic: Termination attributable to the employee Presented By: Paresh I. Patel

Termination attributable to the employee:

1) Breach of employment contract: An employer is entitled to terminate on grounds of breach when the employee is required to act in a certain manner by the employer or by the nature of the job, and fails to do so. This assumes greater significance when key personnel fail to adhere to the terms of their employment contract, and/or directions of management as there is a certain level of expectation that is attached to their appointment. Usually, the job description underlines the expectation of the employer that the employee will perform his/her duties appropriate to their designation. It is also common practice to include performance of express or implied directions in the job description as it may not be possible to include all performance parameters required of the employee. Example: Lets assume a person is appointed as the managing director with the intent of supervising the operation and growth of the organization, and the employment contract placed a requirement on the employee to discharge duties appropriate to those of a managing director, among others. During the course of employment, the person does not act in accordance with the directions of the Board, as is required of a managing director by law, and the expectation of the employer expressed under the contract. If the employee fails to deliver, the employer can accordingly hold the person in breach of the employment contract, and terminate his/her employment. 2) Termination on account of inefficiency: Another common cause leading to severance of employer-employee relationship is inefficiency and lack of performance. This is a just and equitable ground for termination since it is not reasonable to expect the employer to keep a person employed where the employee fails to perform consistently. However, before the employer terminates the employment, it must collate enough material and information so that it can, at a later stage, counter any allegations by the aggrieved employee of foul play. 3) Misconduct leading to termination: The most common ground for termination is usually misconduct. This ground has also been the subject of
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litigation as under termination for misconduct a certain level of stigma is attached. It is essential for employers to either define precisely what will amount to misconduct or to have an exhaustive uniform HR policy which will describe inclusive instances of how an employee can be removed for misconduct. The term misconduct implies an outright breach of duty or obligation arising under the employment contract or the human resource policy or wrongful behavior. In practice, common examples of actions, or inactions, which are included in HR policy under the term misconduct are - reporting late to work, unauthorized absence from work, negligence in performing duties/work, willful insubordination and not following instructions of the management or supervisor. In some situations, misconduct may also be categorized into minor misconduct and grave misconduct. Usually a process is defined in the context of minor misconduct which, typically, includes warning the concerned individual and where there is no improvement despite a certain number of warnings, escalating the matter to the management level or provide pecuniary penalties. With regard to grave misconduct, the usual practice is to provide the concerned employee with a show-cause notice to justify his/her reasons for the misconduct, and where the reasons forwarded are not acceptable; termination. An employer has to ensure that due process is followed before termination.

Termination of Employment

Topic: Judicial stand in India on Termination of Employment Presented By: Munjal Bhatt

Judicial stand in India on termination of employment

As is clear from the foregoing, under the Indian legal regime, the basis on which the employer-employee relationship is governed is purely contractual and based upon judicial precedents. The legal principles governing the relationship have evolved from various judicial decisions and the courts have categorized termination into two categories, (a) Termination simpliciter and (b) termination for misconduct. While the courts have not defined misconduct, the Supreme Court has held that termination of an employee whether simpliciter or punitive has to be decided on the facts and circumstances of each case. In one such case4, the Supreme Court has examined instances where termination is simpliciter or on account of misconduct i.e. punitive. One of the judicially evolved tests to determine whether an order of termination is punitive is to evaluate whether prior to the termination there was: 1) A full-scale formal enquiry 2) Into allegations involving moral turpitude or misconduct which, 3) Culminated in a finding of guilt. If all three factors are present, the termination is held to be punitive irrespective of the form of the termination order. Conversely, if any one of the three factors is missing, the termination has been upheld. In India, termination of employment on grounds of misconduct is treated as a punitive action as a certain level of stigma is attached to such a termination. Where an employee is terminated for misconduct, it casts aspersions on the capability of the individual to contribute to the employer and also impacts on future employment with other employers. Courts in India have a tendency of leaning in favor of employees, and where it feels the employer has removed an employee as a punitive measure, it has set-aside the termination as unreasonable. Frequent communications from the employer to the employee informing him of his shortcomings, lack of performance and unsuitability have worked in the
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employers favor in justifying termination and avoiding long drawn litigation by the employee. Additionally, courts in India have held that the reasons for termination of employment must have objective considerations, i.e. must be based on facts which can be proved by documentation or evidence. In Avineshwar Sawhneys case, the employer had terminated the employment of a person on account of inefficiency and loss of confidence by the management. The lower court upheld the termination order after recording the testimony of the management witness and held that the subjective satisfaction of the employer was sufficient to cause termination. However, on appeal, the lower courts decision was overruled by the appellate court on the basis that the subjective satisfaction of the employer for termination has to be based on objective considerations. The burden lies on the employer to show and place on record the necessary documentary evidence.

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Topic: Termination of Employment under Closure Presented By: Irina R. Varsat

Termination of Employment:
Existing regulations require companies to obtain government permission to close an operation or lay off workers in firms with 100 or more employees (service-industry companies, such as IT firms, are exempt). The Industrial Disputes Act, 1947 requires employers wishing to close an establishment to apply for permission at least 60 days before the intended closing date. If the government does not convey its decision within 60 days of the application, approval is deemed granted. A company can appeal against a rejection to the Industrial Tribunal. Workers in an establishment that is closed illegally (that is, without approval) remain entitled to full pay and benefits. Dismissal for misconduct is allowed without notice under the Industrial Employment (Standing Orders) Act, 1946. The Payment of Gratuity Act 1972 entitles workers to a gratuity of up to Rs. 350,000 after five years of continuous service. It is usually difficult for large companies to dismiss staff. Retrenchments and layoffs require full explanation to and prior approval from the state government. (Retrenchment under an agreement specifying a termination date requires no prior notice.) The last-in, first-out principle is usually followed.

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Topic: Acts of Misconduct under the Industrial Employment (S.O.) Act, 1946 Presented By: Vishal S. Pathak

Acts of Misconduct:
Now with standing to the general meaning of the terms of misconduct, the following acts and/or omissions which are illustrative and not exhaustive? Shall be treated as serious misconducts:  Theft  Engaging in gross incompetence or gross negligence  Permitting or helping an unlicensed person perform activities requiring a license or falsifying documents.  Releasing confidential information without authorization  Being convicted of a crime: local, state or national law  Being sexually or physically abusive  Working under the influence of alcohol or other drugs  Failing to follow established safety policies and procedures  Fighting or the deliberate harming of another  Insubordination or refusing to perform assigned work  Destroying property intentionally  Using obscene or abusive language  Possessing firearms, or other weapons or dangerous materials on property  Using property without proper authorization  Using time granted for leave, planning, and workshops for purposes for which it is not intended  Falsification of documents  Sleeping during scheduled work hours  Receiving or making excessive personal phone calls  Engaging in threatening or intimidating behavior  Using computers for storing, sending, receiving, viewing or downloading illegal material via the internet.  Absenteeism  Lateness  Failure to comply with Absences Notification and Certification Procedure  Poor effort at work  Performance of duties below an acceptable standard  Failure to complete time sheets as instructed
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Ignoring safety/ hygiene/ security rules Extended meal breaks Failure to maintain a tidy and safe working environment Misuse of telephone or other organizational resources Serious neglect of safety/ security rules Smoking in prohibited areas Willful or excessive wastage of material Unsatisfactory attitude to visitors or members Leaving the premises without permission Insubordination Refusal to carry out a reasonable work instruction Deliberately ignoring safety/security rules Disclosing confidential business information to a third party Falsification of records and, Discrimination etc.

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Topic: Separation of Employment Presented By: Mayur G. Jethva

Separation of employment:
1) Except as provided specifically in the contract of service, the employer may terminate the services of an employee after giving one months notice in writing or on payment of wages in lieu thereof. The management reserves the right in requiring employee to work and not relieving him during the notice period. In case of services of temporaries/casuals, no notice is required if the service is terminated before the expiry of the period. Subject to the provisions of statues. The employer may terminate the service of an employee who is on probation without giving on months notice or salary in lieu thereof. 2) The employment of a permanent employee shall be liable for termination on the following amongst other ground: a) Insanity, senility, physical infirmity, contagious or infectious diseases, continued ill health, unfitness for employment with the employer as declared by the employers doctor or for loss of confidence. b) Conviction in a criminal case. c) Engaging in any vocation without the written permission of the management or found to have been working elsewhere during the period of leave, in case the employee is on full time contract with the management. d) Loss of confidence by the employer in an employee due to leakage of information or propaganda against the management. e) Insolvency. 3) An order relating to discharge or termination of service shall be in writing and shall be signed by the employer/management and copy thereof shall be supplied to the employee concerned. In cases of general retrenchment on closing down of office, no such order will be given to individual employees.

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4) Is an employee intends to leave the service. He shall give one months notice of his intention to do in writing to the employer or may if he wants to be relieved earlier. Surrender in lieu thereof wages equivalent to the days for which the notice falls short of one month, at the discretion of the management. But if the exigencies of the work so require, the employer may refuse to relieve him earlier than the entire period of notice. The employer also reserves the right to accept the resignation with immediate effect subject to payment in lieu thereof. 5) No notice or wages in lieu of notice shall be necessary. If the service of an employee are dispensed with for misconduct. 6) Employees other than those who have service bonds to serve the employer for a specified period, who wishes to leave the employers service, will be required to give the employer notice as per terms of appointment. Employee on termination to give account of the employers property: 1) On termination/resignation of the service, an employee shall give a proper account of all identity cards, clothing, reports and records, papers, books, tools, instruments and other property of the employer in his possession, custody or change before the last payment of outstanding wages. The value of all shortages and/or damages to the employers tools, instruments, and other prop[arty in the employees possession, custody or charge shall be recoverable from him and without prejudice to any other mode of recovery, may be recovered by adjustment against whatever dues are payable to him. 2) Employee will be required to compensate the employer for all losses/damages caused by him to the employers official premises and all movable property therein. 3) Failure to comply with all or any of the above provisions shall entitle the employer to withhold the employees dues to make appropriate deductions there from and to take such other action as may be deemed fit, which also includes the initiation of legal proceedings in the court of law.

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Topic: Case study of Mr. Nagpal Presented By: Anupama I. Yadav

Termination of Employee for Misconduct: Case - 1

For the purpose of clarity let us take a hypothetical situation where the services of an employee say one Mr. Shyam Nagpal have been terminated by an IT company with immediate effect for misconduct and the Company now wants to understand the legal consequences of such termination. Mr. Nagpal was engaged in software development and was officiating as a Group Leader. As a Group Leader, Mr. Nagpal was responsible for monitoring and regulating the work of two to three associates in his team in addition to provision of software development services. Mr. Nagpals performance for the first one year of service was above average but his performance deteriorated thereafter and he often reported late for work. Considering Mr. Nagpals lack-luster performance and due to companys decision to downsize its work force, Mr. Nagpals services were terminated with immediate effect with one month salary in lieu thereof. The Company soon realized that it has failed to undertake proper steps to dispense of Mr. Nagpals services and is assessing its implication and exposure under law. Assessment: The validity of Mr. Nagpals termination and consequences thereof under Indian laws would be largely determined by the crucial question whether Mr. Nagpal was a workman within the definition of IDA. An employee is termed as a workman if he is employed to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward. A person who is employed mainly in a managerial or administrative capacity, or who being employed in a supervisory capacity draws wages exceeding Rs. 1600/- per month or exercises functions mainly of a managerial nature is excluded from the definition of a workmen. Supervisor means an individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward or discipline other employees or responsibility to direct them or to adjust their grievances or
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effectively to recommend such action and in exercising such authority he uses of independent judgment. In nutshell, a supervisor is one having authority over others, to superintend and direct. Indian Labour Tribunals and Civil Courts have considered the actual and predominant duties discharged by an employee and remuneration received by such an employee as the basis to determine classification under workman or non-workman category and held that mere managerial or administrative designations are not conclusive of the status of any employee as nonworkman. The Supreme Court of India has repeatedly held that it is the principal duties being performed by an employee which are to be considered for the purposes of determining the real status of the employee namely, whether such an employee has been discharging administrative, managerial or supervisory work. An employee may at times be required to perform managerial, supervisory or administrative work, but such occasional performance by itself does not determine the real status of the employee and it is the principal or major duty performed by the employee that determines the employees real status and whether or not the concerned employee is a workman under the IDA. Consequently, whether Mr. Nagpal, who presumably was not exercising managerial or administrative function, was employed in a supervisory capacity as a Group Leader or for technical/software development work would depend on whether the main and principal duties carried out by him were: (a) Those of a supervisory character i.e., he had powers to give directions to the others as to the actual manner in which they were to perform and carry out their duties and scrutinize the work done by others in order to ensure that it was being done properly, or (b) Of a nature carried out by a software developer. If Mr. Nagpal was mainly doing supervisory work, but incidentally or for a fraction of the time, also did some software development work, then he was employed in supervisory capacity and would not be a workman under the IDA. Conversely, if the main work done was of software development, the mere fact that some supervisory duties were also carried out incidentally or as a small fraction of the work done by Mr. Nagpal will not convert his employment as a skilled workman into one in supervisory capacity.
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Considering the nature of work performed by Mr. Nagpal was primarily of a software development and not supervisory, Mr. Nagpal would be classified as workman in terms of IDA. In terms of IDA, an employee in workman category who has been in continuous service for at least one year cannot be terminated at will of the employer unless the employee is dismissed by way of disciplinary action or as a result of non-renewal of contract of employment, or terminated on ground of continued ill health, etc. Termination for any other reason whatsoever including termination of service on ground of reduction in volume of business amounts to retrenchment and the IDA prescribes detailed procedure for retrenchment of a workman including compliance with last to come first to go rule, notice, payment of prescribed compensation, i.e., 15 days average pay for every completed year of continuous service, filings/prior approvals from the government, if required, etc. For termination of services on disciplinary grounds, the procedure for dismissal of an employee (who is classified as workman under IDA) on account of misconduct and/or indiscipline (which should be normally incorporated into the Employee Handbook of a company) would need to be in terms of broad principles of natural justice, the IDA and guidelines evolved from various court decisions as follows: 1) 2) 3) 4) 5) Issue a charge sheet; Hold a domestic enquiry; Peruse the report of the enquiry officer; Issue show cause notice to the employee; and Issue order of punishment.

In view of the foregoing, termination of Mr. Nagpals services for misconduct without following the principles of natural justice viz. sending notice, enquiry, providing opportunity of defense to the employee may be open to challenge. Contravention of the provisions of the IDA renders the companys directors, manager, secretary, agent or other officer concerned with management liable for the prosecution and penalties if it is proved that the offence(s) was committed with knowledge or consent and would entitle the terminated employee to raise dispute before the labour court and seek reinstatement of services with back wages.

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Remedies: To minimize the exposure arising from termination of Mr. Nagpals services for misconduct without following the procedure prescribed under IDA, it is advisable for the company to undertake the following: (i) The Company should immediately clear and pay all pending dues of Mr. Nagpal including gratuity as per the Payment of Gratuity Act, 1972, if applicable, at the earliest. (ii) The Company should maintain adequate supporting evidence to show Mr. Nagpals poor performance at work. The Companys notices/reminders to Mr. Nagpal to improve his work and productivity should also be part of this paperwork. To minimize employee related disputes and grievance, it is advisable to be guided by the rules and guidelines stated in the Employee Hand Book and exercising due precaution and adherence to the termination related procedure prior to discharge of employees for misconduct.

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Topic: Case study of Mr. Sawhney vs. J. K. Industries Presented By: Nitin T. Patel

Termination of Employee for Misconduct: Case - 2

In order to ensure that termination is not bitter, or acrimonious, or leads to protracted legal disputes the employer and employee must try to insert specific grounds for termination in the employment contract. In certain cases, the employer has been held liable to pay compensation, solely on the basis of a sentence under the contract. For example, in Avineshwar Sawhney v. J. K. Industries Limited the employer had terminated the employment. The employment contract provided that the employee was hired for a period of five years, and the termination would be carried on grounds of misconduct and breach. The employee was hired in 1975 for a period of five years. The employment was terminated in 1977 and the employee sued the employer and sought arrears of salary from 1977 till 1981 for wrongful termination. The lower court held the employer could terminate the employment; however, the appellate court reversed the decision and held the termination wrongful. The primary contention of employee, accepted by the court, was that the clause provided that the employer shall not ordinarily terminate the employment. The court had further held that termination of the employee can indeed be carried out on subjective considerations; however, the subjective considerations must be based on objective facts. This case has been discussed further ahead. It is, therefore, pertinent that the employer very carefully considers the provisions under the contract, and factors in judicial precedents, before proceeding to terminate.

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