Disclaimer: The information provided in this Q&A is accurate as of March 14, 2024, and is intended for general informational purposes only. It is not intended as legal advice and should not be relied upon as such.

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1. What are the grounds for termination of employment contract in Armenia?

According to the Labor Code of Armenia (hereinafter also referred as “The Code”): The employment contract is terminated:

• by the agreement of the parties.
• at the initiative of the employee.
• at the initiative of the employer.

1. Are there legitimate reasons for an employer to unilaterally terminate an employment contract in Armenia?

According to the Code: The employer has the right to terminate the employment contract in the following cases։

• Liquidation (termination of activity) of the employer,
• When the number of employees is reduced.
• Non-compliance of the employee with the position held or the work performed.
• Reinstatement of the employee to the previous job.
• Regular non-fulfillment by the employee of the duties assigned to him by the employment contract or internal disciplinary without a valid reason.
• Loss of trust in the employee.
• Long-term incapacity of the employee (if the employee has been temporarily incapacitated for more than six months in a row or for more than 180 days during the last twelve months, excluding days of pregnancy and maternity leave).
• The employee being at the workplace under the influence of alcohol, drugs, or psychoactive substances.
• Non-appearance of the employee during the entire working day (shift) due to a disreputable reason.
• An employee's refusal or avoidance of mandatory medical examination.
• The foreigner's residence status is revoked or invalidated.
• an employee fails to perform his work duties for more than 10 working days (shifts) in a row or during the last three months for more than 20 working days (shifts) as a result of not being allowed to work in case of non-submission by the employee of the documents that are a necessary condition to attend work during the state of emergency declared due to infectious diseases in the Republic of Armenia or the prescribed quarantine.

1. Are there any grounds for termination of employment contract based on the ground “loss of trust”?

According to the Code, the employer has the right to terminate the employment contract with the employee based on “loss of trust”, if the employee:

• Committed an act because of which the employer suffered or could have suffered material damage.
• While carrying out educational functions, has committed an act that is incompatible with the continuation of the given task.
• Has released state, official, commercial or technological secrets or has informed the competing organization thereon.
• Violated the requirements of legal acts, rules of organization and implementation of work, instructions on ensuring the safety and health of employees, which caused or could cause serious consequences, endangering the life and health of persons or creating a real threat to the life and health of persons, or causing damage to their life and health.
• Illegally (without consent or notification) used the employer's or other employees' computer equipment or information systems (means of accessing information systems (login, password, etc.)), through which he obtained work or personal data, made illegal use of data, recording , destruction, transformation, encapsulation, duplication, distribution, or performed activities involving the intervention of digital technologies, including virus or software installations, that could disrupt or have disrupted the normal operation of the employer.

Cassation Court of Armenia has recently issued a precedent on a labor dispute, where the principle of special relationship and loyalty between the employee and employer has been established, according to which, in certain circumstances “the EE must behave reasonably predictable and manifest lawful behavior, loyalty to the ER, prudence and conscientiousness, tact and common sense, contributing to the stability and efficiency of labor relations.” 

Not necessarily violation of disciplinary rules only may lead to loss of trust. Means that even if separate pieces of employee’s overall behavioral puzzle do not qualify for a policy or rule violation, the general picture of an employee’s behavior (once put together) may contribute to the loss of trust towards such an employee.

1. What conditions must an employer meet before terminating an employment contract in Armenia (such as providing notification or other requirements)?

As per the Code, employers are required to provide advance notice to employees before dismissal in situations outlined within the Labor Code.

The duration of notice periods for terminating employment contracts varies depending on the grounds for termination.

For example, in the cases of termination due to the liquidation (termination of activity) of the employer or when the number of employees is reduced, the employer must provide employees with two months of prior notice.

In case of non-observance of the notice period, the employer is obliged to pay the employee damages for each overdue day of notice, which is calculated based on the employee's average daily wage.

1. Under what circumstances can an employer terminate an employee without prior notice?

The employer is entitled to terminate the employment contract without giving notice to the employee in instances specified by the Code. These include the following cases:

• Reinstatement of the employee to the previous job.
• Regular non-fulfillment by the employee of the duties assigned to him by the employment contract or internal disciplinary without a valid reason.
• Loss of trust in the employee.
• The employee being at the workplace under the influence of alcohol, drugs, or psychoactive substances.
• Non-appearance of the employee during the entire working day (shift) due to a disreputable reason.
• An employee's refusal or avoidance of mandatory medical examination.

1. Are there any notification requirements?

According to the Code, In the notice of the termination of the employment contract, the following are mentioned:

• the basis and reason for dismissal,
• in the case of offering another job to the employee, the name of the position, the amount of salary or the lack of possibility to offer another job.
• year, month, date of dismissal.

1. Are there any mandatory severance payment provisions upon the termination of employment?

In accordance with the Code, employees have the right to receive severance payments upon termination in these cases:

• Liquidation (termination of activity) of the employer.
• When the number of employees is reduced.
• Non-compliance of the employee with the position held or the work performed.
• Reinstatement of the employee to the previous job.
• Long-term incapacity of the employee (if the employee has been temporarily incapacitated for more than six months in a row or for more than 180 days during the last twelve months, excluding days of pregnancy and maternity leave).

Depending on the grounds for termination, severance payment is either:

• calculated based on the employee's average monthly salary; or
• determined by considering the employee's continuous work experience with the given employer.

1. Are employees entitled to annual leave in Armenia?

All employees have the right to receive paid annual leave. The minimum duration of annual leave is 20 working days for a five-day working week and 24 working days for a six-day working week.

The duration of leave may vary for certain specialized job roles.

1. How is annual leave granted?

According to the Code, for each working year, annual leave is provided in the given working year, based on the application submitted by the employee to the employer for granting annual leave. The working year begins on the date of the employee's employment on the day specified in the employment contract and ends on the corresponding month and date of the next calendar year.

Annual leave for the first year of employment is granted after six months of continuous employment with the given employer. With the agreement of the parties, the annual leave may also be granted before the employee has been continuously employed for six months with the given employer. For the second and each subsequent working year, annual leave is granted at any time of the working year.

By agreement of the parties, annual leave may be granted in parts. If the annual leave is granted in parts, one part of the annual leave must be at least 10 working days in the case of a five-day working week, and at least 12 working days in the case of a six-day working week.

1. Is it possible for an employee to decline taking annual leave in Armenia?

Yes, but there is a time limit. According to the Code, if an employee avoids or refuses to use annual leave or a part of it for two and a half consecutive working years without submitting an application for granting annual leave, the period of granting annual leave to the given employee is determined by the employer. The ER should pay a penalty to the employee for each missed day after that period in the amount of 0.15% of the employee's average monthly salary, but not more than the average monthly salary.

Avoidance or refusal can be expressed by all means, including evasive behavior.

This is a recent addition to the Code, effective as of December 1, 2023.

Accrued vacation days before December 1, 2023, are not subject to new regulations. The employer, on its own initiative, cannot send the employee to vacation for the vacation days accrued before December 1, 2023.

1. How is an employee's payment for annual leave determined?

According to the Code, for annual leave, the employer pays the employee an average wage.

The average monthly salary amount for the period of the last 12 months before the employee is eligible for vacation days shall be taken as a basis for calculation.