Termination of Employment: A Legal Explanation of Closing Employment Contracts

Termination is the formal cessation or expiration of the legal validity of an employment or civil contract in accordance with the grounds and procedures prescribed by law. Just as every stage of employment relations is regulated by law, the conclusion of these relations—namely, their termination—is defined by strict legal procedures. According to the Labor Code of the Republic of Azerbaijan, termination occurs when an employment contract is ceased based on one of the grounds provided by law, resulting in the conclusion of employment relations with specific legal consequences.

Whether the termination is initiated by the employee’s resignation, the employer’s substantiated decision, or mandatory circumstances required by law, the process must strictly adhere to the Labor Code in all instances.

What is Termination?

According to the Labor Code, termination refers to the invalidation of an employment contract based on specific legal grounds and through established procedures. Termination can be applied due to the initiative of the employee or employer, as well as circumstances beyond the control of either party. The law explicitly states that an employment contract may only be terminated based on the grounds provided within the Code; no other reasons can serve as a legal basis for termination.

Grounds for Terminating an Employment Contract

An employment contract may be terminated based on the following:

• Initiative of one of the parties:
  • Employee: May submit a resignation letter with one month’s prior notice (Article 69).
  • Employer: May only terminate based on the grounds specified in Article 70 of the Code.
• Expiration of the contract term: Fixed-term contracts terminate upon the completion of the term.
• Changes in labor conditions: If an employee refuses new terms, the contract may be terminated under Article 68.2(c).
• Change of the enterprise owner: This applies only to specific categories defined in the Code.
• Circumstances beyond the control of the parties (Article 74):
  1. Call to military service.
  2. Continuous loss of labor capacity for more than 6 months.
  3. Legal enforcement of a court sentence (e.g., imprisonment or disqualification from holding certain positions).
  4. Death of the employee.
• Additional grounds defined by the parties: Extra grounds may be included at the time the contract is signed (Article 75).

Note: It is prohibited to terminate an employment contract based on multiple grounds simultaneously.

How to Resign (Employee Initiative)

The employee’s initiative to terminate the contract is regulated by Article 69.

• The employee may demand the dissolution of the contract by providing one month’s written notice.
• If a specific termination date is not stated in the letter, the contract cannot be terminated until the notice period expires.
• The employee may withdraw their resignation before the notice period ends, provided a replacement has not already been hired. Failure to follow this procedure may lead to the termination being deemed invalid.

Grounds for Termination by the Employer

An employer may terminate a contract under the following circumstances:

• Liquidation of the enterprise.
• Reduction of staff or workforce (redundancy).
• A decision by an authorized body stating the employee is unfit for the position due to insufficient professional or qualification levels.
• Failure to perform labor functions.
• Failure to pass the probation period.
• Reaching the age limit in state-budget-funded organizations.

The employer must provide a formal, substantiated document (order/decree) for each ground.

Documentation and Procedures

Termination must be formalized exclusively through a written order (decree). The order must include:

• Full details of the employer and employee.
• The legal basis for termination (article, section, and paragraph).
• The effective date of termination.
• Supporting documents for the order.

The absence of any of this information may lead a court to invalidate the order. In electronic contracts, the order must be uploaded to the employee’s electronic cabinet.

Benefits and Entitlements

Upon termination, the law provides various protections:

• Notice periods for redundancy or liquidation.
• Severance pay.
• Paid days off for job searching.
• Allowances amounting to 2–3 months’ average salary under specific termination grounds.
• Final settlement of all payments must be made on the last working day.

Conclusion

Termination is not merely “leaving a job”; it is a serious legal process. The Labor Code stipulates that every termination must have a legal basis, follow correct documentation, and ensure all employee rights are upheld. Any procedural error can create legal liability for the employer and offer the employee an opportunity to seek legal redress.

Given the detailed nature of current legislation, Arbitro Law Firm provides professional legal services for the correct application of termination processes, protection of employee rights, mitigation of employer risks, and resolution of court disputes.