Legal Definitions - additional-consideration rule

The additional-consideration rule is an important exception to the common legal principle of "employment-at-will." Generally, employment-at-will means that an employer can terminate an employee for any reason (or no reason at all), as long as it's not an illegal one, and an employee can also leave their job at any time. However, the additional-consideration rule applies when an employee, who does not have a formal written employment contract, undertakes a significant personal or financial hardship *beyond* the typical duties of their job.

This substantial sacrifice must be made in direct reliance on clear oral assurances from the employer about job security or long-term employment. If the employer later terminates the employee without a valid cause, despite these assurances and the employee's significant sacrifice, the employee may be able to claim that an implied contract was formed and subsequently breached by the employer.

• Example 1: Significant Financial and Career Investment

  Scenario: A highly skilled software developer with a stable, well-paying job at a large tech company is recruited by a promising startup. The startup's CEO orally assures the developer of a long-term leadership position and significant equity, stating, "We're building a team for the next decade, and you're a cornerstone of our future." Based on these strong assurances, the developer resigns from their secure role and, at the startup's explicit request, invests a substantial portion of their personal savings into a specialized, non-transferable training program crucial for developing the startup's proprietary technology. Six months later, the startup faces unexpected financial difficulties and terminates the developer's employment, citing "at-will" employment.

  Explanation: The developer's act of leaving a secure job and investing a significant amount of personal savings into a specialized, non-transferable training program, specifically at the employer's request and in reliance on oral promises of long-term employment, constitutes a substantial hardship beyond normal job duties. Under the additional-consideration rule, the developer could argue that an implied contract for long-term employment was created, which the startup breached by terminating them.

• Example 2: Major Personal and Family Relocation

  Scenario: A seasoned operations manager living in a major city with their spouse and young children is offered a director position by a manufacturing company located in a remote, rural area. During the hiring process, the company's Vice President of Operations explicitly states, "We need someone to build our new facility from the ground up and lead it for the foreseeable future; this is a permanent, foundational role." Relying on these strong oral assurances of job security, the manager sells their family home, uproots their children from their schools, and moves their entire family to the remote town, incurring significant financial and personal disruption. After 18 months, the company decides to consolidate operations and eliminates the director position, terminating the manager's employment and claiming "at-will" status.

  Explanation: Selling a family home, uprooting children from their schools, and relocating an entire family to a remote area involves significant personal and financial hardship that goes far beyond simply accepting a new job. These actions were undertaken based on the employer's oral promises of a permanent, long-term role. The additional-consideration rule could allow the operations manager to pursue a claim for breach of an implied contract, as their substantial sacrifices were made in reliance on the employer's assurances of job security.