Termination of Contract is the right that any party involved in a continuous contract has to terminate it for the future with their unilateral decision. Specifically, when it concerns an employment contract, termination by the employer takes the form of dismissal, while from the employee’s side, it is expressed as resignation from the job.
A. Indefinite-Term Employment Contract
The termination of an indefinite-term employment contract is a unilateral, unconditional legal act, and its validity does not depend on the existence or validity of the reason for its termination, as it is a right of both the employer and the employee (Article 669, para. 2 of the Civil Code, in conjunction with Articles 1 of Law 2112/1920 and 5 para. 3 of Law 3198/1955). Termination of an indefinite-term employment contract occurs through a unilateral declaration of will, which must be clear and serious, and is valid if made in writing (silent termination is allowed in cases where the written form is not required) and the full statutory compensation is paid. If the termination of the employment contract is deemed invalid, it does not produce its usual effects. The invalidity could be due to non-compliance with the above conditions (written form and payment of full compensation) or abusive exercise of the employer’s right (Article 281 of the Civil Code), such as termination based on animosity, hatred, or revenge due to a prior legal but disagreeable behavior by the employee. Termination for economic reasons, like restructuring the employer’s business, can also be invalid if these reasons are pretexts and mask true ill-will.
For valid termination, a serious reason (such as a significant failure of the employee) is no longer required (Article 117 para. 2 of Law 4623/2019). An objectively unjustified termination — one that is not based on serious business reasons — does not automatically lead to an abusive termination, as it would otherwise turn from a non-causal termination to a causal one.
B. Fixed-Term Employment Contract
A fixed-term employment contract has a specified end date (its duration is clearly defined, either explicitly or implicitly, or due to its purpose and type, according to Article 669 of the Civil Code). This means that the contract automatically ends when a future, certain event occurs. In this case, either party has the right to terminate the contract at any time for a serious reason without following a notice period (Article 672, para. a of the Civil Code). If no serious reason exists, termination is invalid, meaning it is considered never to have occurred (Articles 174, 180 of the Civil Code), and the contract remains in effect. If the employer refuses to accept the employee’s services, they owe wages for the delay (Article 656 of the Civil Code).
A serious reason for termination includes incidents, even one specific event, which, regardless of its origin and fault, make it intolerable for the terminating party to continue the contract (Article 672, para. a). Such reasons could include the employee’s breach of contract, a failure in duties, or actions damaging the trust between the parties. The circumstances surrounding the serious reason, like the nature of the job or the type of business, should be taken into account. It is not necessary for damage to be caused to the employer, nor for the failure to end the contract of other employees in similar circumstances to constitute grounds for invalid termination.
Termination for serious reasons cannot be waived by agreement between the parties (Article 672, para. b of the Civil Code).
