Resignation and termination:the difference in entitlements and notice

Contract type comes first

Before comparing resignation and termination, check the contract type. The rules on ending a contract depend on it.

A fixed-term contract ends when its term runs out. Neither side has to give notice, and the end-of-service gratuity is paid in full. If either side ends it early without lawful cause, compensation is due.

An indefinite contract can be ended by either side with notice. The resignation scale in Article 85 applies to this type of contract.

The notice period

To end an indefinite contract, either side must give the other written notice in advance. Under amended Article 75, if the wage is paid monthly, notice is at least thirty days when the employee resigns and sixty days when the employer terminates.

If the wage is not paid monthly, notice is at least thirty days, whichever side ends the contract. A side that ends the contract without notice must pay the other the wage for the notice period.

The two sides can agree a longer notice period, but not one shorter than the legal minimum.

Gratuity where the employer terminates

When the employer terminates, or a fixed-term contract expires, the end-of-service gratuity is paid in full under Article 84. That is half a month's wage for each of the first five years and a full month's wage for each year after that, with part years counted pro rata.

Nothing is deducted, because the employer ended the contract. The other cases are measured against this full amount.

Gratuity on resignation

When an employee resigns from an indefinite contract, they get part of the gratuity on a scale set by Article 85: nothing for less than two years' service, one-third for two to five years, two-thirds for more than five but less than ten, and the full amount at ten years or more.

The fraction applies to the full gratuity worked out under Article 84, not to the wage. Work out the full gratuity first, then apply the resignation fraction.

Where the rule reverses

The resignation scale has exceptions. A resigning employee gets the full gratuity in these cases:

1. 01Leaving because of force majeure beyond the employee's control (Article 87).
2. 02A female employee leaving within six months of her marriage or three months of giving birth (Article 87).
3. 03Leaving for one of the reasons in Article 81, which cover breaches by the employer. The departure is then treated as a termination, and the gratuity is paid in full.

Disciplinary dismissal and forfeiture

In the other direction, Article 80 lists cases where the employer can end the contract without gratuity, notice, or compensation.

The employer must follow the procedure, with no shortcuts. The employee must be given a chance to state their case, and the contract must be ended within the set period from the date the incident was established.

For absence, a prior written warning is required before dismissal. If an employer dismisses someone for continuous or intermittent absence without a documented warning, the labour court may overturn the dismissal, and the employer will owe both the gratuity and compensation.

Compensation for termination without lawful cause

If either side ends the contract without lawful cause, the other side is owed compensation. This is separate from the end-of-service gratuity and is paid on top of it.

For an indefinite contract, the amount is fifteen days' wage for each year of service. For a fixed-term contract, it is the wage for the rest of the term. Either way it cannot be less than two months' wage, unless the contract itself sets the compensation for this kind of termination (Article 77).

The question is whether there was lawful cause. An employer has the right to terminate, but terminating without lawful cause means paying compensation.

What is paid in every case

However the employment ended, some entitlements are always paid: wages for days worked up to the end date, cash for unused annual leave, and a certificate of experience.

Settlements most often forget the leave payment. It is a separate entitlement, paid alongside the gratuity and calculated on the last wage.