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Last updated: 16.08.2023

How does an employment relationship end?

The Employment Contracts Act provides for the end of employment relationships. A fixed-term employment contract usually ends on the agreed-on end date. A permanent employment relationship ends when it is terminated.

End of a fixed-term employment contract 

A fixed-term employment contract ends when the fixed-term period expires or the agreed work is completed. Neither party may terminate a fixed-term employment contract unless the possibility of termination is expressly agreed on in the contract.  

End of a permanent employment contract 

A permanent employment contract is in force until the employee or the employer terminates it. The notice periods specified in collective agreements must be followed.  

The employer may terminate a permanent employment contract only for a justified and weighty reason such as a reason related to the employee or on financial or production-related grounds associated with business operations. 

Before termination, the employer is required to determine whether the worker can be employed in another position in the company or within the group of companies. If this is possible, the employer must offer the job vacancy to the employee to avoid termination. 

If the employer terminates the employment contract without a justified reason, the employer must pay compensation to the employee for illegal termination. The amount of compensation is equal to the employee’s wages for 3–24 months. 

The employee is not required to justify the termination of the employment contract, but the employee must also comply with the notice period. 

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