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When does an employment contract automatically end?

An employment relationship is not only over when an employee resigns or when the employer dismisses him. There are different ways a contract can terminate. It is important that employers make sure they follow the rules of each type of termination.

There is termination in ‘common law’ or ‘by operation of law’. It sounds like a lot of legalese, but employers need to know the differences because there are different legal implications for them. If employers do not know them, they could land up fighting a case of unfair dismissal!

There are four reasons for employment to end automatically by operation of law. ‘By operation of law’ terminations happen when the law kicks in automatically to end employment.

Four instances when an employment contract automatically ends…

1.  Death

The contract will automatically be over when an employee dies. Employers do not have to do anything to end the relationship.

2.  Sequestration or liquidation

The equivalent of ‘death’ for the employer. When the entity (business) goes under.

3.  Expiry date

When a fixed term contract reaches expiry date it automatically ends without the employer or the worker having to take any other steps. For example, giving notice. This is unless the contract includes options for renewal or permanent employment.

4.  Impossibility of performance

Circumstances that make it impossible for an employer or  employee to meet their obligations to each other. For example, a foreign national’s work permit is revoked.