## Facts

- Woodstock Soapstone Company, Inc. manufactured wood-burning and gas-burning stoves and employed Lois Havill in various roles beginning in 1982.
- Havill worked part-time, then full-time; she was laid off in 1987 for financial reasons and returned in 1990 (initially from home as an independent contractor, later as a part-time office employee), becoming full-time again in 1994.
- In 1994, the company issued written personnel policies functioning as a personnel manual for employees.
- The policies set out specific disciplinary protections, including entitlement to two written warnings within a twelve-month period before termination for certain conduct.
- The policies also imposed a “just cause” requirement for termination for identified problems (e.g., unauthorized absences, safety violations, theft, careless or faulty work, incompatibility with other employees).
- Over time, Havill’s duties expanded from data entry and mailings to customer service and sales, mainly by telephone and sometimes in the showroom.
- The company terminated Havill without following the progressive discipline and warning procedures described in the policies, prompting her contract-based wrongful discharge suit.

## Issues

1. Whether the employer’s written personnel policies created an implied employment contract limiting termination to just cause and requiring progressive discipline.
2. Whether the employer breached any such implied contract by discharging Havill without following the policies’ disciplinary procedures.
3. Whether the trial court properly calculated back pay and front pay, including whether additional compensation such as bonuses should have been included.

## Decision

- The Vermont Supreme Court affirmed the trial court’s determination that the personnel policies created an implied contract requiring just cause and specified disciplinary steps.
- The Court affirmed the finding that the employer breached the implied contract by terminating Havill without following the required procedures.
- The Court affirmed the availability of back pay and front pay as contract damages in this setting.
- The Court remanded for recalculation of damages due to errors in the trial court’s computation.

## Legal Principles

- Written personnel policies may form an implied employment contract when they contain definite, promissory terms addressing discipline and discharge, are communicated to employees, and are not negated by a clear at-will disclaimer.
- A “just cause” clause and a defined progressive discipline process in employer policies can restrict an employer’s discretion to terminate and become enforceable contractual obligations.
- Once personnel policies are treated as contract terms, an employer’s failure to follow the promised disciplinary procedures can constitute a breach supporting wrongful discharge damages in contract.
- Back pay and front pay may be awarded for breach of an implied employment contract, but the amounts must be supported by the evidence and calculated using non-speculative assumptions, with consideration of mitigation and proof of contingent compensation.

## Conclusion

The court held that the employer’s written personnel policies imposed enforceable just-cause and progressive discipline limits on termination and that the employer breached those obligations by firing Havill without following them; liability was affirmed, but the damages award for front and back pay was sent back for recalculation.


Havill v. Woodstock Soapstone Co., 865 A.2d 335 (Vt. 2004)