The cabinet has endorsed a recommendation by the Public Service Commission who investigated a number of allegations of misconduct and breach of duties against the CEO.
RNZI reports a termination letter was served on Papalii Thursday.
The chief executive was suspended last month with a senior officer of the court, one of the assistant CEOs.
The Commission has yet to decide on the assistant chief executive, Ve'atauia Faatasi Puleiata, who is accused of using a government vehicle for his family business.
Last month the cabinet terminated the contract of another assistant CEO of the same ministry for alleged misappropriation of public funds.