Employer is liberal to terminate an unlimited contract, after supplying the legal notice, with none of any reasons whatsoever, and also the worker has certain options. Still there’s a confusion when it involves termination of an unlimited labour contract- especially amongst the employers.

If any of the parties, either an employer or a worker can terminate an unlimited contract at any time for a legitimate reason by supplying the other party a notice prior to 30 days to the termination.

For employees getting wages on day to day basis , the notice period must be as furnished hereunder;

1. If the worker has accomplished his employment lesser than 1 year and above 6 months, the notice period is 1 week.
2. If the worker has accomplished his employment for 1 year or above, the notice period is 2 weeks.
3. If the worker has accomplished his employment not lesser than 5 years, the notice period must be 1 month.

Once we undergo the article carefully, we will figure out that an employer’s right to terminate an unlimited contract should be only on a legitimate reason. With reference to the termination of unlimited contact, it’s laid out in section 3 of Article 113 that this contract might be terminated by any of the parties only, if the rationale of termination must be a valid one and period of notice served on time.
Then the matter of thought must be – 1, what must be a legitimate reason for concluding an unlimited contact? 2, what must be the idea for identifying such a legitimate reason? 3, who is that the authorized person to make a decision the rationale of termination is valid or not.

Article 122 of the Labour Law provides the following:
“An employee is considered to have been arbitrarily dismissed by his employer, if the cause for the dismissal is irrelevant to the work, and more specifically, if the reason is that the worker has submitted a significant complaint to the competent authorities or has instituted legal proceedings against the employer that have proven to be valid”.
From the above mentioned, there is no doubt that the right of termination of an unlimited contract under the Labour Law isn’t an unfettered right and is subject to the requirement that an employer demonstrates the existence of a legitimate reason for such a termination.

Confusion always rises when it comes to the dismissal of an unlimited contract – especially amongst employers. There are countless employment myths usually counted on either to the disadvantage of the employer or the worker. One among these myths is that an employer is liberal to terminate an unlimited employment contract, after issuing the prescribed notice, with none of any justifiable reasons. This myth actually stems from the incorrect interpretation of Article 117 of the Labour Law. Article 117 reads as follows:

1. Both the Employer and the worker can terminate an unlimited contract for a legitimate reason at any point of time ensuing its assumption by giving the other party, a notice in less than 30 days before the termination.
2. Just in case of a worker, working on a day to day basis the period of notice must be as follows:
   a) one week if the worker has been employed beyond six months but below one year;
   b) two weeks (fortnight), if the worker has been employed not lesser than one year;
   c) one month if the worker has been employed not lesser than five years.”

A careful reading of the aforementioned Article exposes that an employer’s right to terminate an employment unlimited contract isn’t free but instead conditional on the presence of a “legitimate reason”. This requirement has been emphasized in section 3 of Article 113 that the unlimited contract could also be terminated mutually by either party only: “if the provisions of the law regarding the period of notice and legitimate grounds for termination are observed”.

The enquiry will then get on what’s considered to be a legitimate reason for terminating an unlimited contract, what’s the standards for distinguishing or determining such authentic reason, and who has the authority to determine whether the reason for termination is valid or not?

We have already laid down that an employment contract (whether limited or unlimited) could also be terminated by employers with immediate effect for reasons supplied in article 120 of the Labour Law. Aside from these situations, the Labour Law provides that a legitimate reason for terminating an unlimited contact should be of any reason that is “work related”. Article 122 of the Labour Law provides the following:

“A worker’s service shall be presumed to have been unlawfully/arbitrarily terminated by his employer, if the cause/reason for the termination is irrelevant to the work, and more specifically, if the rationale is that the worker has submitted a serious allegation/complaint to the concerned authorities or has initiated legal proceedings against the employer that have proven to be valid”.

From the aforementioned, it is obvious that the right of termination of an unlimited contract under the Labour Law isn’t an unfettered right and is subject to need of an employer demonstrates the existence of an authentic reason for such kind of termination.