The employer and the employee may both terminate an employment contract entered into for a specified term and an employment contract entered into for an unspecified term at any time by agreement. An employment contract may be cancelled extraordinarily only with good reason adhering to the terms for advance notice. 

An employment contract may be cancelled by a declaration of cancellation made in a format which can be reproduced in writing. An employer shall justify cancellation.

An employer has several legal ways of cancelling an employment contract. Most of the ways in which the employer can cancel the employment contract are dependent on the employee, for example state of health of the employee, and the insufficient work skills him or her possesses.

An employer cannot however cancel an employment contract on the basis of pregnancy or representation of other employees. The cancellation of the employment contract needs to have legal basis or else it is considered to be void.

The employer needs to give notice of the extraordinary cancellation of the employee’s employment contract, and the dates in which the notice needs to be given, depend on the years of employment with the employer. For example in cases, where one has been working under a year, the notice needs to be given 15 days before the cancellation of the contract.

An employee may cancel an employment contract extraordinarily with good reason. An employee may cancel an employment contract extraordinarily due to a fundamental breach of the employer's obligation, such as delayed payment of wages and also for reasons arising from the employee, in particular if the employee's state of health, or family duties do not allow him or her to perform the agreed work.

An employee will have to notify the employer of ordinary cancellation no less than 30 calendar days in advance. However an employee is not obligated to give to the employer advance notice of extraordinary cancellation if it cannot be reasonably demanded that the performance of the contract be continued.

An action with the court or an application with a labour dispute committee for establishment of voidness of cancellation shall be filed within 30 calendar days as of the receipt of the declaration of cancellation. If a court or labour dispute committee establishes that cancellation of an employment contract is void due to the absence of a legal basis or the non-conformity with the law or nullified due to a conflict with the principle of good faith, it shall be deemed that the contract has not expired by cancellation. The court or labour dispute committee can, at the request of the employer or the employee, terminate the employment contract as of the time when it would have expired in the case of validity of the cancellation.