(based on Halacha Psuka, vol. 35 - A Condensation of a Psak by Beit Din Mishpat V’Halacha B’Yisrael)
Case:

Ruling : The gemara (Bava Batra 21b) says that a teacher of young children can be fired without warning because if he is unqualified, he can cause irreparable damage. Rashi says the damage is from the mistakes students absorb. Tosafot says the problem is the time that could have been spent learning correct things. The Rama (Choshen Mishpat 306:8) rules that although such a teacher need not be warned, there must be a pattern of poor teaching if there was no warning. While the classic reasons for dismissing a teacher are missing in this case, the Minchat Yitzchak (IV, 75) says that there is an implicit agreement that a teacher accepts upon himself to conform to the principal’s authority without which the institution loses the critical sense of order. These issues affect termination of employment, not only between years but within them.
According to governmental guidelines, a teacher with a temporary teacher’s license can be let go without reason during a three-year trial period. This is also the common practice. Therefore, def was entitled to fire pl, whether based on Torah law or local practice.
Local practice is that a teacher must be informed that he is not being rehired by May 31. This is to give them the opportunity to look for a new job, which is usually done in June. However, in the setting of yeshivot, staffs are not complete until much closer to the opening of the school year and the deadline for firing is also significantly later. However, if pl was orally assured that he would be taken back, he could not be fired months later. This is because the assurance is a nullification of the necessary notification before firing or because in a society where many work without written contracts, hiring orally works as a kinyan situmta. He cannot fire him subsequently due to the same complaints because he was aware of the problems before rehiring. Furthermore, once this has occurred we can assume the teacher started preparations at which point he had started working. Furthermore, def can be required to pay by causing pl not to look for a new job (although certain other conditions need to be fulfilled for payment to be appropriate). Since neither side had proof as to whether def had or had not given an assurance, a compromise was arrived at in lieu of an oath on the matter.