The employee is not able to perform the job adequately.
The company is reducing is workforce for economic reasons.
1. The employee violated a known company rule or rules.
The first legal reason that an employer can use to justify the termination of an employee is if the employee violated a "known" company rule. In order for this reason to be upheld in a court of law the employer will need to prove that: (1) the rule actually exists; (2) the employee knew that it existed; (3) the rule was violated; (4) other employees were terminated for the same infraction; and (5) the termination was reasonable punishment for the infraction.
Documentation is critically important to defend yourself in a wrongful termination lawsuit. The first two things that the court will consider is if the rule that was broken actually existed and that the employee knew of its existence. To prove this you, as the employer, must be able to show where the rule was written down, and how it was displayed so that it is reasonable to assume that the employee was aware of its existence.
Many employers get into legal trouble when they terminate an employee because they broke an "unwritten but known" rule. If it is not in writing, it may not be defensible in a court of law, and most likely the judge will rule in favor of the employee. To protect yourself against this, have ALL of your company rules written and have ALL of your employees sign a copy of these rules stating that they have received a copy, read, understood, and agree to abide by the rules. This signed document will help prove that the company’s rules exist and that the employees are aware of them, and that they agree to abide by them.
Documentation will also help defend your position and prove that the employee broke the rule and that the infraction was serious enough to necessitate termination. Here witness reports, video recordings from security cameras, and job samples may all be gathered and used to defend your position.