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In the event of termination of the employment contract by the employer, except in the case of dismissal for just cause, the worker is entitled to compensation.

It is important to underline the rule laid out in Personal Income Tax Code (CIRS), Art 2, number 4, which states that the amount paid as 'global compensations' related with the termination of the labour contract is not taxable up to the limit of the proceeds of the average amount of regular remuneration in the form of remuneration earned in the last 12 months divided by the number of years or fraction of seniority in the debtor entity.

Contribution Code, Art 46, para 2(v) establishes that only the compensation for termination of the employment contract by agreement, in situations where the employee has the right to unemployment benefits as a result of the said termination, may be considered a basis for contributions. This means that, in situations of unemployment without entitlement to unemployment benefits, compensation does not constitute a contributory basis.

The employment contract may be terminated in several ways:

Termination