On June 2, 2015, the Illinois Appellate Court, Second District, held that an employment agreement that guaranteed the employee a two-year minimum term of employment is not terminable for the employee’s poor performance during the employment term. Eakins v. Hanna Cylinders, LLC, 2015 IL App (2d) 140944. This appeal involved a claim for breach of an employment contract. The employment agreement guaranteed the employee a minimum term of employment of 24 months. After 14 months, the employer terminated the employee, and did not pay him any salary after the date of termination. The employer claimed that the employee had breached the contract by his poor performance and that therefore it had the right to terminate him for cause before the expiration of the employment term. The employer also argued that an employer always retains the right to discharge an employee for cause regardless of the duration of the employment contract. The employee contended that the employer had no right to terminate him for cause, because the employment agreement guaranteed employment and salary payment for a specific duration without any performance requirements or standards.
Under Illinois law, an employment contract without a fixed duration is terminable at will by either party at any time, with or without cause. If no duration of employment is specified, hiring at a monthly or annual salary is presumed to create an at-will employment relationship. However, the parties can overcome the presumption of at-will employment by contracting for a specific guaranteed duration of employment. The Illinois Appellate Court found that the contract was not terminable at will, because it guaranteed a salary for a fixed term of 24 months. The Appellate Court also found that the employee’s level of performance was not a condition for the employer’s performance of its contractual obligations, or a basis for a termination for cause. Even if the employee’s job performance was substandard, the contract did not specify any performance standards. The employer’s argument, that performance was a valid basis for termination, would have transformed the specific-duration contract into an at-will employment contract. This would have given the employer the right to terminate the employee at its pleasure at any time. But that was not the contractual intent of the parties. The employment agreement unambiguously specified a fixed employment term of 24 months. The plaintiff’s level of performance, as to which the contact was silent, was not a valid basis for the employer to prematurely terminate the employment contact. Thus, the employer was found liable for breach of contract.