Resignation and termination: the difference in entitlements and notice

Before comparing resignation and termination, the contract type must be established, because the rules on ending differ with it.

A fixed-term contract ends on expiry of its term with no notice required from either side, and the end-of-service gratuity is paid in full. Ending it before its term by either party without lawful cause gives rise to compensation.

An indefinite contract ends by the will of either party subject to a notice period, and it is the contract to which the thirds rule on resignation applies.

A party wishing to end an indefinite contract must notify the other in writing a set period in advance: sixty days where the employee's wage is paid monthly, and thirty days otherwise.

The obligation is mutual. A resigning employee owes it just as the employer does, and a party terminating without notice owes the other a cash payment equal to the wage for the notice period.

The parties may agree a longer period; they may not agree a shorter one than the statutory minimum.

Where the relationship ends by employer termination, or by expiry of a fixed-term contract, the end-of-service gratuity is paid in full under Article 84: half a month for each of the first five years and a full month for every year thereafter, with fractions of a year counted pro-rata.

Nothing is deducted from that gratuity because the termination came from the employer; this is the baseline against which the other cases are measured.

Where an employee resigns from an indefinite contract, the full gratuity is not due but a sliding scale set by Article 85 applies: nothing for service under two years, one-third for two years up to five, two-thirds for more than five but under ten, and the full amount at ten years or more.

The fraction is taken from the full gratuity computed under Article 84, not from the wage. The correct order is to compute the full gratuity first, then apply the resignation fraction.

The thirds rule is not absolute, and there are cases where a resigning employee earns the full gratuity:

Conversely, there are cases in which the employer may end the contract without gratuity, notice, or compensation, being those set out in Article 80.

That forfeiture is conditional on a procedure that may not be skipped: the employee must be given the opportunity to state their case, and the dissolution must occur within the period prescribed from the date the incident was established.

In absence cases specifically, prior written warning is required before dismissal. An establishment that dismisses for continuous or intermittent absence without a documented warning leaves the dismissal liable to be set aside before the labour court, with gratuity and compensation both returning against it.

Where either party ends the contract without lawful cause, the other earns compensation, which is entirely separate from the end-of-service gratuity and is added to it rather than replacing it.

Its amount in an indefinite contract is fifteen days' wage for each year of the employee's service, and in a fixed-term contract the wage for the remaining term, unless the parties agreed otherwise at not less than two months' wage.

What matters here is lawful cause rather than the right to terminate as such. An employer holds the right to terminate, but terminating without lawful cause costs compensation.

Whatever the reason the relationship ended, some entitlements do not lapse: pay for days actually worked to the end date, a cash allowance for unused annual leave, and a certificate of experience.

The leave allowance in particular is what settlements most often overlook. It is a separate entitlement paid alongside the gratuity and computed on the last wage.