It happens all the time. A poor performing, or even blatant policy-violating former employee applies for unemployment. The immediate reflex by most employers is to contest it. Good idea? Well, it really depends.
If the employee has resigned, and you have a clear and unambiguous resignation letter, then sure. It makes sense to submit the resignation letter and contest it.
But what if the resignation letter also says a bunch of stuff like: I resign under duress for the unfair treatment I have consistently been subjected to, my boss is abusive, I complained and was then harassed, etc. (you get the idea). Still a good idea? Maybe not.
Why? Because contesting unemployment, may just be the catalyst to encourage that former employee to file a claim or lawsuit. If they contested and prevailed, they often feel validated.
I have explained the differing standards for good cause in this blog before, and also discussed how a bad EDD hearing can prompt litigation. All of that advice (from over a decade ago) still rings true!