No automatic change in the supervisor field when there is a change in employment type from contract to permanent and change on department.
Reproducing the Issue
Change the department/change the employment type from contract to permanent.
This is expected behavior when no rule is involved.
You will need to manually change the supervisor whenever there is a change with employment type or on department.
However, you can use business rule to automate the process in case you have predefined managers to be assigned to employees on certain conditions.
Manual supervisor entry, no change with supervisor , KBA , LOD-SF-EC-JOB , Job Information , How To