At the end of the day, it's up to the employer. There is nothing to prevent them from either leaving you on their books until the expiration of your contract, or filing paperwork to terminate the contract.
My impression, though, is most employers (and maybe even the government officials they work with) are clear on the rules, or have different interpretations.
However, in my own discussions with my employer about my upcoming move to Cambodia, there seems to be some issue of the number of foreign teachers can have on their books, a quota perhaps that has some relationship with the amount of revenue the school earns. If that's true, maybe your school is at it's quota, needs to hire a new teacher to replace you, and therefore needs to get you off their books.
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