Discharge in Breach of an Implied Contract

A third basis for wrongful discharge cases in some circumstances is breach of an implied contract. An implied contract is determined by a court to exist where there is no written or verbal contract between the parties, but the law imposes duties on the parties as if there were an express contract based on the relationship of the parties. In other words, there is no contract but injustice was done. Generally, this theory is applied to an employer-employee relationship where circumstances exist in which a court determines that it would be unjust to the employee, based on legitimate expectations created by the conduct of the employer.

Example: When employers ask employees to work for them, make promises to them such as "lifetime" employment or employment so long as they perform satisfactory work. Based upon such promise, the employee relocates causing the other spouse to lose paid work due to relocation. Under this example the employee was induced by the employer promises to undergo significant detriments and it would not be fair to deprive him/her of the benefit of long-term employment.

Another implied-contract theory is the premise than an employer's handbook or policy that makes statements directly or indirectly implying that an employee is not at-will can be seen as an implied contract.

Example: A statement in the employee handbook which provides that the employee will only be discharged for "just cause" will be treated as an actual contract and enforced. The easiest way for employers to avoid implied-contract liability is to use a handbook with a specific disclaimer stating that the handbook does not constitute a contract of employment and none of its provisions create any contractual obligations by the employer to the employees.