The Difference Between Contract Nonrenewal and Termination

March 26, 2019 • Keith McLemore & Leslie Story

The Difference Between Contract Nonrenewal and Termination

When it comes to separation from employment for Chapter 21 contract holders, it’s easy to get confused when trying to sort out the legal standards applicable to probationary, term, and continuing contracts.

Districts often inquire about the difference between nonrenewal and termination of a contract. Contract nonrenewal can only occur at the conclusion of the last year of a term contract. A good cause termination occurs mid-contract. A probationary contract may be terminated mid-contract for good cause, or at the end of the contract if the termination is in the best interest of the district.

Term contracts

Educators employed under term contracts leave districts involuntarily by one of two ways—nonrenewal or termination. Nonrenewal is a decision not to renew an employee’s contract at the end of the term specified in the contract for reasons specified in policy. To nonrenew a term contract, the district must follow specific statutory procedures for providing notice and a hearing. If a district does not take appropriate action to nonrenew a contract at the end of the term, it must employ the individual in the same professional capacity for the next school year (TEC §21.206). In other words, unless the district takes affirmative action to nonrenew a term contract, the employee will be entitled to work at the district in the same professional capacity for the subsequent school year.

In contrast, termination occurs during the contract term and is essentially the same as discharge (i.e., being fired). A mid-contract termination of a term contract requires a showing of good cause as determined by the board. In the context of term contracts, the commissioner has stated that good cause is “the employee’s failure to perform the duties in the scope of employment that a person of ordinary prudence would have done under the same or similar circumstances.” The “good cause” required for a mid-contract termination is a higher standard than the pre-established reasons for nonrenewal set forth in the district’s local nonrenewal policy.

Probationary contracts

Separation of employment at the end of a contract term involves different terminology for employees under probationary contracts. Unlike term contracts, probationary contracts can’t be nonrenewed at the end of contract term.

A probationary contract can be terminated at the end of the probationary period if the board finds that the best interests of the district will be served by terminating the employment. The board’s decision to terminate based on the best interest of the district is final and cannot be appealed (TEC § 21.103). If the district fails to provide notice of the termination of the probationary contract at least 10 days prior to the final day of instruction, the district must employ the employee under another probationary contract, if applicable, or under a continuing or term contract in accordance with policy. The type of contract required depends on the employee’s years of experience.

Similar to termination of term contracts, terminating a probationary contract in the middle of the contract year requires good cause as determined by the board. The standard for good cause in the context of probationary contracts is slightly different. Good cause is defined in statute as “the failure to meet the accepted standards of conduct for the profession as generally recognized and applied in similarly situated school districts in the state” (TEC § 21.104). As in all employment decisions involving Chapter 21 contracts, the district must follow statutory due process to terminate a probationary contract.

Continuing contracts

Although much less common, continuing contracts are unique in that any separation from employment is considered a termination—regardless of when it occurs—because the contract never expires. Continuing contracts therefore are never subject to nonrenewal and educators employed under them are always able to appeal to the commissioner of education for an independent hearing.

For more information on terminations and nonrenewals, visit the Terminations section of the HR Library, where you can find helpful guides including Termination of Contract Employees and the term contract renewal/nonrenewal cycle reference.

Keith McLemore is a consultant at TASB HR Services. Send Keith an email

Leslie Story is the lead attorney for Policy Service at TASB Legal Services. Send Leslie an email

Tagged: contracts, "Educator contracts", "Employment contracts", "Independent contractor", "Teacher contracts"