Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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Which type of dismissal is characterized by an employment contract not being renewed?

Termination
Constructive dismissal
Non-renewal
Resignation

The correct answer is: Non-renewal

The correct answer is characterized by the fact that when an employment contract is not renewed, it signifies the end of the employment relationship as a consequence of an agreed-upon time period or specific terms within the contract. Non-renewal occurs when the employer decides not to extend the contract for a further period, thereby concluding the employment without any implication of fault on the employee’s side. This type of dismissal does not involve performance issues or misconduct and is often a strategic decision made by the employer. Unlike termination, which usually implies an active decision to end employment due to various reasons, non-renewal specifically relates to the lapse of a fixed-term contract. Therefore, it clearly distinguishes itself from other types of dismissals which may involve other dimensions such as resignation or feelings of forced resignation associated with constructive dismissal.