Translation of the attached article:
Some people may think that resignation and termination of an employment contract are similar terms, but in reality, there are fundamental legal differences between them in terms of the reason for ending the employment relationship, the procedures that must be followed, and the rights and obligations resulting from each case.
Understanding these differences is not limited to employers only; it is also important for every employee who wants to end the employment relationship or is facing a decision to terminate their contract. In this article, we will explain the difference between resignation and contract termination, the key legal effects of each, and the rights guaranteed by the Labor Law to both parties.
The Difference Between Resignation and Contract Termination
Employment relationships may end for different reasons. Therefore, below we explain the difference between resignation and contract termination in detail as follows:
First: Contract Termination
- The decision to terminate the contract is issued by the employer for an economic or legal reason related to the restructuring of the company.
- The employee receives the full end-of-service benefit, which is half a month’s wage for each year during the first five years of work, and one month’s wage for each year after that.
- If the worker is not notified of contract termination 30 days in advance, or as stated in the contract, the worker receives one month’s salary as compensation.
- If the contract termination is arbitrary and without a legal reason, the employee has the right to claim compensation.
If the employment relationship is ended by the employer, it is important to learn about employee rights in case of redundancy, so that you know the dues and compensation you may legally be entitled to claim.
Second: Resignation
- The employee is the one who makes the resignation decision in writing, and the resignation should not be conditional.
- The end-of-service benefit differs in this case. It is not added if the employment period is less than two years. From two to five years, the worker receives one-third of the calculated benefit. From five to ten years, the worker receives two-thirds. If the employment period exceeds ten years, the worker receives the full benefit.
- The employee is obligated to notify the company of leaving work before the notice period specified in the contract.
- The employee must obtain official approval for the resignation or wait for the legally specified notice period.
Employee Rights upon Resignation or Contract Termination
There are certain rights that the employee obtains upon resignation and upon contract termination. Below, we explain these rights in each case as follows:
End-of-Service Benefit:
When an employee submits a resignation before completing two years of work, the resigning employee does not receive a benefit. From two to five years, the employee receives one-third of the benefit. From five to ten years, the employee receives two-thirds. If the employee works for more than ten years, they receive the full benefit.
If the company terminates the contract for a non-disciplinary reason, the employee receives the full benefit without reduction.
After understanding the difference between end-of-service benefit in resignation and contract termination, you can use the end-of-service benefit calculator to estimate your financial entitlements more clearly before taking any action.
Notice Period:
The law requires each party to notify the other before resignation or contract termination for a period ranging from one to two months, depending on the contract. If the resignation takes place without notice, the company deducts the notice allowance from the insurance.
If the contract is terminated without notice, the employee receives the notice allowance along with their dues when leaving work.
Before accepting an employment termination decision or claiming the notice allowance, you may need to know whether an employee may be dismissed without notice, so that you understand the legal cases that require notice or compensation in place of it.
Compensation and Arbitrary Termination:
In the case of resignation, the resigning employee does not receive compensation because the resignation is their own decision; they only receive their entitlements. However, if the contract is terminated arbitrarily without a legal reason, the employee receives additional compensation of up to one month’s salary for each year of work, in addition to the benefit and basic entitlements.
If the employment contract is terminated without a clear legal reason, it is important to learn about compensation for arbitrary dismissal, so that you know when an employee has the right to claim additional compensation alongside their basic entitlements.
The Effect of Resignation and Contract Termination on the Professional Record
When a worker submits a resignation before the contract is terminated, or when the contract ends directly, this affects their professional record as follows:
Resignation:
Resignation gives the impression that the worker is ambitious and wants to develop professionally, and that they have a vision for their future rather than simply waiting for instructions.
Contract Termination:
If the contract termination is due to problems or negligence, this may raise questions about the worker’s performance. However, if the reason for termination is force majeure circumstances on the company’s side, this does not create a negative impression, but it may only require explanation later.
If the employment contract is fixed-term and was terminated before its expiry date, you may need to know about terminating a fixed-term employment contract before its expiry, so that you understand when termination is lawful and what rights result from it.
Best Law Firm for Labor Cases
Nawaf bin Awad Al-Harbi Law Firm is one of the best firms specialized in labor cases in Saudi Arabia. It provides specialized legal services in labor cases to help individuals and establishments handle these matters according to the provisions of the Saudi Labor Law.
This includes providing legal consultations related to resignation and termination of employment contracts, reviewing employment contracts, clarifying the rights and obligations resulting from them, and providing legal support in labor disputes and negotiations between parties.
The firm also prepares and reviews legal memoranda and applications, represents clients before labor authorities and courts when needed, and provides legal advice regarding compensation, end-of-service benefits, and other labor rights.
Contact now with the best labor cases lawyer to obtain specialized legal consultation on resignation and employment contract termination, with a review of your legal position, clarification of your rights and entitlements, and assistance in handling labor disputes according to the Saudi Labor Law while protecting your interests before the competent authorities.
Conclusion
The difference between resignation and contract termination is essential for understanding the rights and obligations that arise when the employment relationship ends. The procedures and legal effects differ according to the reason for contract termination and the surrounding circumstances. Therefore, being familiar with the provisions of the Labor Law and consulting a specialized lawyer when there is a dispute or conflict helps protect rights and avoid decisions that may result in unexpected legal or financial consequences.
Frequently Asked Questions
Can an Employee Withdraw Their Resignation?
Yes, within seven days of submitting the resignation, provided that the employer has not approved it before the employee withdraws it. However, if the resignation has been accepted and clearance procedures have started, the resignation cannot then be withdrawn.
Which Is Better: Service Termination or Resignation?
The answer depends on the employee’s circumstances. If they have enough time to plan for the next job, resignation may be better. If they have sufficient time, it may be better to wait until the contract ends.
Is the Expiry of a Contract Considered Resignation?
No, the expiry of a fixed-term contract without renewal is not considered resignation at all. Resignation occurs by the worker’s will, while contract expiry results from the end of its agreed term.
