Termination of Employment Agreement in Armenia: Legal Grounds, Process, and Employer Obligations 

Understanding how employment relationships can be ended is just as important as knowing how they begin. In Armenia, the termination of employment agreement is strictly regulated to protect both employers and employees. From notice periods to severance obligations, every step must comply with the Armenian labor law termination rules.

For businesses, ignoring these requirements can lead to disputes, penalties, or reputational risks. Whether it’s restructuring, performance-related issues, or other grounds for employee dismissal in Armenia, companies need to follow the legal framework carefully to ensure compliance and avoid complications.

This article outlines the key rules, procedures, and employer obligations around employment termination in Armenia, giving you a clear roadmap for managing the process lawfully and responsibly.

Legal Framework for Termination of Employment

The rules around ending an employment relationship in Armenia are defined by the Armenian Labor Code, which sets out strict requirements for both employers and employees. Compliance with these rules is not optional, every employment contract termination process in Armenia must align with the Code to avoid disputes or liability.

A key element is the type of agreement the employee holds, as this directly affects the termination procedure:

• Fixed-term contracts – These agreements run for a specified duration or until a project is completed. In most cases, termination before the agreed end date is only possible under specific legal grounds (such as mutual consent, serious misconduct, or company liquidation). If the contract reaches its end date, the employer can simply let it expire without additional obligations, unless the employee continues working and the contract is deemed extended.
• Indefinite contracts – More common in long-term employment, these agreements can only be terminated on legally recognized grounds, such as redundancy, performance issues, or violations of workplace rules. Employers must respect notice periods (generally ranging from 14 to 60 days, depending on the reason) and may also be required to pay severance.

The Armenian labor law termination rules also emphasize the protection of employee rights. For example, dismissal without legal justification, or failure to provide proper notice, can result in reinstatement orders by the court and financial penalties for the employer.

Understanding these types of agreements with employees in Armenia is critical for businesses. Choosing the right contract structure at the hiring stage not only clarifies obligations during employment but also determines the options available when the relationship ends.

By grounding termination procedures in the Labor Code, companies can reduce risks, maintain compliance, and manage employment transitions more smoothly.

Legal Grounds for Termination

The Armenian Labor Code sets out specific legal grounds under which an end of employment in Armenia can take place. Each ground comes with its own rules, procedures, and protections to safeguard Armenian employment rights. Understanding these scenarios helps employers avoid unlawful dismissal and gives employees clarity about their rights.

1. Mutual agreement (Article 109)
   Both the employer and the employee may decide to terminate the contract together. This is often the simplest option, as it requires a written agreement. For example, if an employee wishes to relocate abroad and the employer accepts, the termination is finalized by mutual consent without further obligations.
2. Employee resignation (Article 110)
   An employee has the right to resign by giving written notice—usually 30 days in advance, unless otherwise stated in the contract. In urgent cases (such as health reasons), employees can request immediate termination. Example: a software developer accepts a new job offer abroad and informs the company a month in advance.
3. Employer’s initiative (Articles 113–115)
   The employer can initiate employee dismissal in Armenia, but only under legally defined conditions:

• Disciplinary reasons – such as repeated violations of company rules, absenteeism, or loss of trust (e.g., theft or disclosure of confidential information).
• Economic or organizational reasons – such as redundancy, downsizing, or company liquidation. For instance, if an IT company closes one of its departments due to budget cuts, employees in that unit may be legally dismissed with severance pay.
• Loss of qualifications – if an employee can no longer perform their duties due to lack of required certifications or skills.

Employers must provide notice (generally 14–60 days depending on the case) and in many cases pay severance compensation (Article 129).

4. Expiration of a fixed-term contract (Article 112)
   When a fixed-term contract reaches its agreed end date, the employment ends automatically, unless the employee continues working and the employer accepts. In that case, the law considers the contract extended as an indefinite one. Example: a one-year project-based designer contract ends with the project’s completion.
5. Other legal grounds (Articles 117–120)

• Court decisions – A court ruling may require reinstatement or dismissal in certain disputes.
• Military service or mandatory state duty – Employment can end if the employee is called for compulsory military service.
• Health reasons – If medical examinations prove the employee cannot continue their work due to long-term health issues, termination may be legally justified.

These scenarios ensure that termination is not arbitrary but grounded in law. Both employers and employees should carefully document the reason for dismissal to avoid disputes, as Armenian courts take employee protection seriously.

By following these legally recognized grounds, companies can manage the end of employment in Armenia responsibly while protecting their own interests and respecting employee rights.

Termination by Employer — Requirements and Restrictions

Under the Armenian Labor Code, an employer may initiate termination only if clear legal grounds exist, and even then, strict requirements must be followed. These rules protect Armenian employment rights and ensure that every employee dismissal in Armenia is both justified and compliant.

1. Legal notice periods
   Employers are required to provide written notice in advance. The length of the notice period under Armenia labor law depends on the grounds for dismissal:

• 14 days – for disciplinary dismissals (e.g., repeated misconduct).
• 30–60 days – for economic reasons, redundancy, or loss of qualifications.
• Immediate termination – allowed only in cases of gross violations (e.g., theft or serious breach of trust).

Failing to observe these notice periods can lead to reinstatement orders or compensation claims in court.

2. Documented justification
   Termination must be based on legally valid reasons, supported by evidence. For example, in a redundancy case, the employer should provide internal orders confirming downsizing or restructuring. In disciplinary cases, written warnings or documented rule violations are required before dismissal.
3. Prohibited dismissals
   The Labor Code explicitly prohibits termination under certain circumstances, even if legal grounds exist. These include:

• During an employee’s sick leave or medical treatment.
• During maternity leave or parental leave.
• For employees called to military service or state duty.

Dismissal in these cases is considered unlawful and can result in severe legal consequences, including reinstatement and compensation.

4. Pay in lieu of notice
   Armenian law allows employers to substitute the notice period with a monetary payment—commonly known as “pay in lieu of notice.” This means the employee may be released immediately, but the employer must pay the full salary the employee would have earned during the notice period. For example, if a software company dismisses a project manager with a 30-day notice requirement, it can choose to pay one month’s salary instead of keeping the employee on for that period.

By following these requirements, employers ensure compliance, reduce the risk of disputes, and respect the balance between their business needs and employee protections established under Armenian labor law.

Termination by Employee — Notice and Procedure

Employees in Armenia also have the right to end their employment, and the process is defined by the Armenian Labor Code to ensure fairness on both sides. The end of employment in Armenia initiated by an employee is usually referred to as resignation, and it follows specific rules.

1. Standard resignation process
   Employees must submit a written resignation letter at least 30 days in advance (Article 110 of the Labor Code). This notice period gives the employer time to find a replacement or reorganize workflow. The countdown starts from the date the letter is received by the employer.
2. Early termination for cause
   In certain situations, employees can request immediate termination without observing the 30-day notice. Such cases include:

• Health issues that make continuing work impossible (supported by medical documents).
• Breach of employment rights by the employer (e.g., failure to pay salary on time, unsafe working conditions).
• Other “urgent reasons” defined by law.

For example, if an employer delays paying wages for more than a month, the employee can legally resign immediately and claim compensation.

3. Rights of employees during resignation
   Employees are entitled to receive:

• Their full salary up to the last working day.
• Compensation for any unused annual leave.
• Proper documentation of termination (work record entry, final settlement).

4. Employer obligations
   The employer must respect the employee’s decision to resign, settle payments on time, and provide all necessary documents. Refusing to accept a resignation letter or delaying settlements would be a violation of Armenian employment rights and could lead to legal disputes.

By following this procedure, employees can exit their roles lawfully, and employers can close the employment relationship smoothly, without risk of penalties or claims.

Required Documentation for Termination

A lawful employment contract termination process in Armenia is not complete without proper documentation. The Armenian Labor Code requires employers to keep accurate and detailed records to confirm that every step of termination was handled legally. Missing or incomplete paperwork can lead to disputes, fines, or even court-ordered reinstatement of the employee.

Key documents include:

1. Termination order ( приказ / հրաման )
   – A formal written order issued by the employer, stating the legal ground for termination (e.g., mutual agreement, redundancy, disciplinary reason).
   – Must reference the relevant article of the Labor Code.
2. Resignation letter or mutual agreement (if applicable)
   – Signed by the employee in case of voluntary resignation.
   – In cases of mutual agreement, both parties must sign a written termination agreement.
3. Final payroll statement
   – A detailed calculation of salary owed up to the last day, including overtime, bonuses, and compensation for unused vacation days.
   – Ensures the employee receives all payments as required by Armenian employment rights.
4. Employment record update (Աշխատանքային գրքույկ / Work Book)
   – The employer must enter the termination date and legal basis for dismissal in the employee’s official work record.
   – Incorrect or missing entries can create problems for the employee’s future employment or pension rights.
5. Social security and tax reports
   – Employers must submit final reports to tax authorities, confirming withheld income tax and social contributions.
   – This ensures compliance and protects the employer from later audits.

Why documentation matters
Maintaining accurate records is essential not only for compliance but also for legal protection. If an employee challenges the dismissal in court, the employer’s ability to present a complete file, termination order, payroll statements, and work record entries will be decisive.

Proper documentation closes the employment relationship transparently, safeguards the employer, and upholds the employee’s legal rights under Armenian labor law.

Severance Pay and Final Settlements

Under the Armenian Labor Code, certain types of termination require the employer to provide severance pay in Armenia. These rules ensure employees are fairly compensated when their employment ends for reasons outside their control, while also protecting employers by setting clear calculation methods and deadlines.

1. When severance pay is mandatory
   Severance must be paid in cases such as:

• Company liquidation (Article 129) – when the entire business is closing.
• Staff reduction or redundancy – if positions are eliminated due to economic or organizational changes.
• Employee unsuitability – when an employee cannot continue their role due to health issues or lack of qualifications.
• Reinstatement of another employee – if a court orders the return of a previously dismissed employee to the same position.

2. How severance is calculated
   The amount depends on the employee’s length of service:

• Up to 1 year – at least 10 working days of average salary.
• 1–5 years – 1 month’s average salary.
• 5–10 years – 2 months’ average salary.
• 10–15 years – 3 months’ average salary.
• 15 years or more – 4 months’ average salary.

👉 Example: An IT specialist with 7 years of service is dismissed due to staff reduction. According to the Labor Code, they are entitled to 2 months’ average salary as severance pay, in addition to their final salary and compensation for unused leave.

Employers may also consider practical tax saving tips in Armenia, such as structuring settlements in compliance with the Tax Code to avoid penalties while ensuring accurate withholding of income tax (20%) and social contributions.

3. Final settlement process
   At termination, the employer must provide the employee with:

• Full salary up to the last working day.
• Compensation for unused annual leave.
• Severance pay (if applicable, as per the rules above).
• Final payroll statement with all calculations.
• Employment record (Work Book) update confirming the reason for termination.

All final payments must be made on the employee’s last working day (Article 130). Delays can result in fines, court claims, or even reinstatement orders.

By respecting these rules, employers ensure compliance, protect themselves from disputes, and close the employment relationship transparently while honoring employee rights.

Employee Rights and Employer Obligations

The Armenian Labor Code carefully regulates the balance between employer authority and Armenian employment rights during termination. Both sides have defined roles to ensure fairness and transparency in the process of employee dismissal in Armenia.

1. Employee rights during termination
   Employees are protected by several key rights under the law:

• Right to written justification – Employees must be informed of the legal grounds for dismissal and provided with a termination order referencing the specific article of the Labor Code.
• Right to final payments – Employees are entitled to receive all wages, severance (if applicable), and compensation for unused annual leave on their last working day.
• Right to appeal in court – If an employee believes the dismissal was unlawful or discriminatory, they may appeal to the court within one month of termination. Courts have the authority to reinstate employees and order back pay if the dismissal is found illegal.
• Right to documentation – Employees must receive proper updates in their employment record (Work Book), which is essential for future employment and pension rights.

2. Employer obligations
   Employers must strictly follow procedures outlined in the Labor Code when dismissing an employee:

• Provide legal grounds in writing – Every dismissal must be backed by a documented reason, referencing the specific provision of the law (e.g., redundancy, disciplinary grounds).
• Observe notice periods – Employers are required to respect the legally mandated notice period or provide pay in lieu of notice.
• Maintain records – Employers must issue termination orders, payroll statements, and tax/social security filings to ensure compliance.
• Avoid prohibited dismissals – Employers cannot dismiss employees during maternity leave, sick leave, or military service obligations.

Failure to comply with these obligations can result in reinstatement orders, fines, or additional compensation costs for the employer.

By respecting both employee rights and procedural obligations, companies reduce legal risks while fostering a fair and transparent termination process.

Best Practices for Employers

Handling termination properly is not only about legal compliance, it’s also about maintaining trust, protecting reputation, and avoiding disputes. Employers in Armenia can follow these best practices to ensure that every dismissal process is both lawful and fair.

1. Maintain transparent communication
   Clear, respectful communication helps reduce tension and prevent misunderstandings. Employees should always know the grounds for termination and the timeline for final settlements. Delivering this information in writing, while also explaining it face-to-face, supports fairness and professionalism.
2. Keep thorough HR documentation
   Employers should carefully record performance evaluations, warnings, attendance logs, and other relevant data. Proper documentation ensures that the termination decision can be supported if challenged in court. This is particularly important in cases of disciplinary dismissal or redundancy.
3. Understand contract types and implications
   The types of agreements with employees in Armenia, fixed-term vs. indefinite, determine how termination can be applied. For example, ending a fixed-term contract may not require notice if the term expires, while indefinite contracts come with stricter notice and severance rules. Choosing the right contract type at the hiring stage reduces risks later.
4. Follow compliance procedures
   Employers must strictly respect the steps outlined in the Labor Code: legal notice, written justification, final settlements, and proper employment record updates. Skipping any of these steps can lead to penalties or reinstatement orders.
5. Seek expert advice for complex cases
   Terminations involving mass layoffs, long-serving employees, or sensitive dismissals (e.g., performance or misconduct issues) carry higher risks. In such cases, it’s wise to seek professional guidance. Profin Consulting can provide tailored support on Armenian labor law, payroll compliance, and HR practices, helping businesses handle termination correctly while avoiding costly mistakes.

Conclusion — Lawful Termination Protects Both Parties

Ending an employment relationship is never simple, but when handled in line with the Armenian Labor Code, it becomes a fair and transparent process. Respecting Armenian employment rights means following proper notice periods, providing accurate documentation, and ensuring full settlements on time. For employers, this reduces the risk of disputes, penalties, or reinstatement orders; for employees, it guarantees dignity and protection during transition.

Whenever the rules feel complex, especially in cases of redundancy, disciplinary action, or long-serving staff, seeking professional legal advice is the safest route. By managing employee dismissal in Armenia responsibly, businesses protect both their people and their own long-term stability.