This comprehensive guide outlines the legal framework, requirements, and prohibitions governing employment termination in Armenia. Learn about employer and employee rights, required procedures, notice periods, severance pay obligations, and how to navigate this complex area of Armenian labor law.
Table of Contents
Legal Framework for Employment Termination in Armenia
Employment termination in Armenia is strictly regulated by the Labor Code of the Republic of Armenia, which establishes an exhaustive list of legal grounds for dismissal, procedural requirements, notice periods, and severance pay obligations. Unlike "at-will" employment systems, Armenian employers cannot dismiss employees without specific legal justification.
The Labor Code aims to balance employer flexibility with employee protection, ensuring that terminations are justified, procedurally fair, and provide adequate financial compensation when appropriate. Recent amendments to the Labor Code (including those from 2023) have further refined these requirements, emphasizing employee rights while maintaining employer operational needs.
In Armenia, termination can occur through three primary mechanisms:
- By mutual agreement between employer and employee
- At the initiative of the employee (resignation)
- At the initiative of the employer (dismissal)
This article focuses primarily on employer-initiated terminations, which are subject to the strictest legal requirements.
Valid Grounds for Termination
The Armenian Labor Code provides an exhaustive list of legitimate grounds for employment termination. Employers must ensure their reason for dismissal aligns with one of these specified grounds; otherwise, the termination may be deemed unlawful.
Economic or Organizational Reasons
- Liquidation of the company or termination of the activity of an individual entrepreneur
- Staff reductions/redundancy due to changes in production volume, economic circumstances, technological changes, or work reorganization
Employee Capability and Qualification
- Unsuitability for the position due to insufficient qualifications or health conditions that prevent proper job performance
- Unsatisfactory probation results during the trial period (typically up to 3 months)
- Long-term incapacity (absence for more than 120 consecutive days or 140 days in a 12-month period)
Employee Misconduct
- Regular non-fulfillment of duties or violation of workplace rules without valid reason (requires documented prior disciplinary actions)
- Loss of trust, especially for employees in financially responsible or confidential positions
- Workplace intoxication (alcohol, drugs, or psychotropic substances)
- Unjustified absence for an entire working day
- Refusal of mandatory medical examination when required for the position
Other Legal Grounds
- Reinstatement of a previous employee to the position (e.g., following a successful unfair dismissal claim)
- Retirement age (63 years) when the employee is entitled to a pension
- Foreign worker's residence status invalidated or revoked
- Extended absence due to failure to provide required documents (e.g., during declared infectious disease emergencies)
Important Note on Documentation
For misconduct-based terminations, employers must maintain proper documentation of incidents, warnings, and employee explanations. A pattern of misconduct typically requires at least two documented disciplinary incidents within the preceding year.
Prohibited Terminations and Employee Protections
Armenian labor law explicitly prohibits termination in certain circumstances to protect vulnerable employees and prevent discrimination. Employers are forbidden from dismissing employees in the following situations:
Protected Periods
- During temporary disability (sick leave with medical certification)
- During any approved leave including annual vacation, maternity leave, or other authorized absence
- During pregnancy from the moment the employer is notified with a medical certificate
- Until one month after maternity leave ends
- While caring for a child under 1 year of age
- During lawful strike participation
- While fulfilling state or civic duties (e.g., military training)
Exception: Protected employees may still be dismissed in cases of company liquidation or for serious misconduct under specific Labor Code provisions (Article 113(1), clauses 1, 2, 5-7).
Protected Characteristics
The law explicitly prohibits termination based on discriminatory grounds, including:
- Trade union membership or participation in union activities
- Filing complaints or lawsuits against the employer for labor violations
- Sex, race, nationality, language, or origin
- Political views or religious beliefs
- Marital status or social position
- Age (except for pension eligibility)
Special Protection for Employee Representatives
Trade union representatives and other employee representatives enjoy additional protection:
- Cannot be terminated without prior consent from the state labor inspectorate
- Exception only for serious misconduct or company liquidation
Notice Period Requirements
Armenian labor law mandates specific notice periods before termination, which vary depending on the grounds for dismissal and sometimes the employee's length of service.
| Termination Ground | Required Notice Period |
|---|---|
| Liquidation or staff reduction (redundancy) | 2 months |
| Employee unsuitability or long-term incapacity (up to 1 year of service) |
14 days |
| Employee unsuitability or long-term incapacity (1-5 years of service) |
35 days |
| Employee unsuitability or long-term incapacity (5-10 years of service) |
42 days |
| Employee unsuitability or long-term incapacity (10-15 years of service) |
49 days |
| Employee unsuitability or long-term incapacity (over 15 years of service) |
60 days |
| Revocation of work authorization or residence status | 3 business days |
| Failure to provide required documents (e.g., health certificates during epidemics) | 3 business days |
| Disciplinary violations, loss of trust, workplace intoxication, unexcused absence, refusal of medical exam | No notice required (immediate termination) |
Pay in Lieu of Notice
Employers may opt to terminate employment immediately or before the notice period expires by providing payment in lieu of notice. This is calculated based on the employee's average daily wage for each day of notice not given.
For example, if an employer wishes to terminate an employee immediately instead of giving the required 2-month notice for redundancy, they must pay the equivalent of 2 months' salary as compensation.
Notice Requirements for Employees (Resignation)
For comparison, employees who resign must provide:
- 14 days' notice for indefinite employment contracts
- 5 days' notice for resignation due to urgent reasons (illness, employer's breach of law)
Severance Pay Rules
Severance pay is a lump-sum compensation provided to employees upon termination to cushion the financial impact of job loss. The Armenian Labor Code mandates severance payments in specific circumstances.
When Severance Pay Is Required
One Month's Average Salary must be paid when termination is due to:
- Liquidation of the organization
- Staff reduction (redundancy)
- Reinstatement of a previous employee
Graduated Severance Based on Length of Service applies for terminations due to:
- Employee's unsuitability for the position
- Long-term incapacity
- Reaching retirement age
| Length of Continuous Service | Severance Payment |
|---|---|
| Up to 1 year | 10 days' average wages |
| 1-5 years | 25 days' average wages |
| 5-10 years | 30 days' average wages |
| 10-15 years | 35 days' average wages |
| Over 15 years | 44 days' average wages |
When Severance Pay Is Not Required
Employees are not entitled to statutory severance pay when:
- Terminated for disciplinary violations or misconduct
- They resign voluntarily
Calculation of Severance Pay
Severance is calculated based on the employee's average earnings (typically from the last few months). For example, if an employee with 8 years of service is terminated due to unsuitability, they would receive 30 days' average wages as severance.
Importantly, severance pay is in addition to any notice period or pay in lieu of notice and must be included in the final settlement.
Termination Procedure and Documentation
Proper procedure and documentation are critical for legal compliance. Armenian labor law prescribes specific steps and documentation requirements for termination processes.
Required Documentation
- Written Notice of Termination - Must include:
- The legal basis and reason for dismissal
- The effective termination date
- Information about any alternative positions offered (if applicable)
- Employer's Dismissal Order - An official order citing the relevant Labor Code article and grounds for termination
- Disciplinary Documentation (for misconduct cases) - Records of incidents, warnings, and employee explanations
- Employee Acknowledgment - Proof that the employee received the termination documents
Final Settlement Requirements
On the employee's last working day, the employer must provide:
- Final Salary - Payment for all days worked up to termination
- Compensation for Unused Annual Leave - Monetary compensation for any accrued but unused vacation days
- Severance Pay (if applicable) - As outlined in the previous section
- Payment in Lieu of Notice (if applicable) - If employment is terminated before the notice period expires
- Work Record Book - Updated with the termination entry and reason
- Employment Certificate - Upon request, documenting the position held and period of employment
Critical Compliance Note
Failing to make complete and timely final payments can result in penalties. The Labor Code requires all final payments to be provided by the last day of employment unless otherwise agreed.
Mass Termination Requirements
Additional procedures apply for collective dismissals (affecting more than 10% of employees, but at least 10 people, within a two-month period):
- Notify the State Employment Service at least 2 months in advance
- Notify employees' representative bodies at least 2 months in advance
- Provide information on the number of affected employees, positions, and demographics
Practical Examples and Scenarios
The following scenarios illustrate how Armenian termination laws apply in practice:
Scenario 1: Redundancy Due to Restructuring
Situation: A technology company is automating its quality assurance department, making 15 testing positions redundant.
Legal Requirements:
- Notify the State Employment Service and employee representatives 2 months in advance (mass dismissal)
- Provide each employee with written notice 2 months before termination
- Consider alternative positions within the company before finalizing terminations
- On termination, pay each employee:
- Final salary
- Compensation for unused vacation
- One month's severance pay
- Update and return work record books with "staff reduction" noted
Scenario 2: Termination for Poor Performance
Situation: A sales manager with 3 years of service consistently misses targets despite training and has received two written warnings over the past year.
Legal Requirements:
- Provide 35 days' written notice (based on 3 years of service)
- Offer any available alternative positions
- On termination, pay:
- Final salary
- Compensation for unused vacation
- 25 days' average wages as severance (based on 1-5 years of service)
- Document performance issues and warnings that justify termination
Scenario 3: Dismissal for Serious Misconduct
Situation: An accountant is found intoxicated at work and has been absent for a full day without excuse.
Legal Requirements:
- Document the incidents and request written explanation from the employee
- Can terminate immediately without notice period
- On termination, pay:
- Final salary up to the termination date
- Compensation for unused vacation
- No severance pay required
- Record the specific reason in the termination order and work book
Scenario 4: Protected Employee (Pregnancy)
Situation: A pregnant employee has performance issues. The employer wants to terminate her employment.
Legal Requirements:
- Cannot dismiss the employee during pregnancy or until one month after maternity leave ends
- Can document performance issues and address them through coaching
- May only terminate in extreme cases such as company liquidation
- Can consider offering a mutual separation agreement if the employee voluntarily agrees
Challenging Unfair Dismissal
Employees who believe they have been wrongfully terminated have legal recourse under Armenian law. An unlawful termination might occur when:
- The termination lacks a valid legal ground
- Proper procedures were not followed
- Required notice or severance was not provided
- The termination occurred during a protected period or for a discriminatory reason
Employee's Options
- Labor and Social Inspection Body - File a complaint with this government agency, which can investigate labor law violations
- Court Claim - Bring a legal action for wrongful termination in court
Potential Remedies
If a termination is found to be unlawful, Armenian courts have the power to:
- Reinstate the employee to their previous position
- Order payment of back wages for the entire period of forced absence
- Award compensation in lieu of reinstatement if returning to work is not feasible
- Require payment of legal costs and other damages
Statute of Limitations
Employees generally have one month from the date of termination to file a legal claim for wrongful dismissal in Armenian courts. This short timeframe makes it essential for employees to act quickly if they believe they have been unfairly dismissed.
Frequently Asked Questions
Can an employer terminate an employment contract without cause in Armenia?
No. Unlike "at-will" employment jurisdictions, Armenian labor law strictly requires termination to be based on one of the specific grounds listed in the Labor Code. Arbitrary dismissals without legal justification are unlawful and can be successfully challenged in court.
What is the difference between severance pay and payment in lieu of notice?
Severance pay is compensation based on length of service and termination grounds, designed to provide financial support during transition to new employment. Payment in lieu of notice compensates for the notice period when immediate termination occurs. These are separate entitlements - an employee may receive both in appropriate circumstances.
Can a fixed-term contract be terminated before its end date?
Yes, a fixed-term contract can be terminated early on the same grounds as indefinite contracts. However, if terminated without valid legal grounds, the employer may be liable for wages for the remaining contract period in addition to other remedies.
Is employer approval required for employee resignation?
No, employees have the right to resign by giving the required notice (typically 14 days for indefinite contracts). The employer cannot prevent resignation but can require the employee to work through the notice period unless both parties agree otherwise.
What constitutes "loss of trust" as grounds for termination?
Loss of trust typically applies when an employee has committed acts that undermine the employer's confidence, such as causing material damage, mishandling confidential information, safety violations, or unauthorized use of employer resources. Recent Armenian court precedent has established that a pattern of behavior (even if individual acts don't qualify as serious violations) can legitimately lead to loss of trust.
What happens to unused annual leave upon termination?
Employers must compensate employees for any accrued but unused annual leave days upon termination, regardless of the reason for termination. This payment should be included in the final settlement and calculated based on the employee's average daily wage.
Can a mutual termination agreement waive employee rights?
Mutual termination agreements are legally recognized and can include negotiated terms beyond statutory minimums. However, such agreements cannot waive fundamental rights guaranteed by Armenian labor law. Courts may invalidate provisions that unreasonably disadvantage employees or circumvent legal protections.
What are the consequences for employers who fail to follow termination procedures?
Non-compliance with termination procedures can result in the dismissal being declared unlawful, potentially leading to employee reinstatement, payment of lost wages, compensation for moral damage, and administrative fines. The Labor and Social Inspection Body can also impose penalties for labor law violations.
This article provides a comprehensive overview of termination of employment in Armenia based on the current Labor Code and legal practices as of May 2025. For specific cases and the most up-to-date guidance, consultation with a qualified legal professional is recommended.