Termination of an employment contract is one of the most important sections of a labor contract. Since, how an employment contract terminates is related to a fair distribution of job security. Also, the quality of termination of an employment contract has a strong relationship with efficiency theory. Therefore, the legislator in developing a legal system governing the termination of the employment contract must endeavor to maintain distributive justice and efficiency while establishing a balance between them. In the present article, we intend to explain how to ensure distributive justice and efficiency and to establish a balance between them in developing a legal system governing the termination of employment contract with respect to Iran's labor code and moreover, we will see that due to wide- spreading use of temporary employment contract and the risk of not renewing of the mentioned contracts at the end of work, permanency of labor contract principle, and hence fair distributive of job security has been altered. Also, the complexity of formalities of firing workers has destroyed the efficiency; therefore, there is no balance between efficiency and distributive justice, in important cases of the termination of employment contract in Iran’s labor law.