Resignation, notice or dismissal: what changes in the entitlements?

A question that comes from workers and employers alike: is there really a difference between resigning, being given notice, and being dismissed? The difference is substantial, and it runs through the money, the deadlines and the burden of proof. Three ways of ending a contract lead to three entirely different outcomes.

The reference is the Labour Law and its provisions in force, noting that a number of its articles were amended by Royal Decree No. (M/44) dated 8/2/1446H, the amendments taking effect from 20/8/1446H. Anyone relying on older text may be calculating on a period that no longer exists.

Resignation: a new provision that changes the arithmetic

An article designated Article 79-bis was added to the Law by Royal Decree No. (M/44), and it is the most useful provision for a worker who has submitted a resignation and received no answer. It provides:

• “A resignation request submitted shall be deemed accepted if (thirty) days have passed from its submission with no response from the employer.”
• “The employer may defer acceptance of the resignation request for a period not exceeding (sixty) days if the interests of the work so require, by way of a written reasoned explanation given to the worker”, the deferral being made before the thirty days expire.
• “The worker may withdraw the resignation request within a period not exceeding (seven) days from the date of its submission, unless the employer has accepted it before the withdrawal.”
• “A resignation request may not specify a deferred date for the resignation.”
• “The employment contract shall be deemed in force during the period of the resignation request, and both parties shall perform all obligations arising from it during that period.”

The practical effect is direct. An employer’s silence for thirty days is acceptance, not obstruction. A worker who writes “I resign with effect from the end of next month” has written a deferred date that does not stand. And the seven days give a genuine window to change course; past it, there is none.

The financial effect remains. Article 85 gives a worker who resigns “one third of the award after service of not less than two consecutive years and not more than five years, two thirds if his service exceeds five consecutive years but is less than ten, and the full award if his service reaches ten years or more”. A worker who resigns before completing two years is entitled to nothing of the award under this provision.

Termination on notice: the periods are not equal

An open-ended contract is terminated for a legitimate reason and on written notice. Article 75 was amended by Royal Decree No. (M/44) to distinguish between the two sides:

• Where the wage is paid monthly and the worker terminates, “he must give the employer written notice at least (thirty) days before the date of termination”.
• Where the wage is paid monthly and the employer terminates, “it must give the worker written notice at least (sixty) days before the date of termination”.
• Where the wage is not paid monthly the period is “at least (thirty) days” on whichever party terminates.

A party who fails to observe the period does not lose the termination; it owes its value. Article 76 obliges the party who terminated to “pay the other party, for the notice period, an amount equal to the worker’s wage for that same period, unless the parties have agreed on more”.

There is a right within the notice period that many overlook. Article 78 entitles the worker — where the notice came from the employer — to “be absent during the notice period for one full day a week or eight hours during the week, in order to look for other work, while remaining entitled to the wage for that day or those hours”, provided the employer is notified at least the day before.

Dismissal without the award: a closed list and a procedural condition

An employer cannot dismiss at will without consequence. Article 80 provides that “the employer may not rescind the contract without the worker’s end-of-service award, notice or compensation, except in the following cases, and on condition that it gives him the opportunity to state his reasons for objecting to the rescission”.

Two things in that text underpin every dismissal dispute.

First, the cases are fixed by the text rather than left to judgement. They include assault on the employer, the responsible manager, a superior or a subordinate during or because of work; failure to perform fundamental obligations or disobedience of lawful orders despite written warning; bad conduct or an act offending honour or trust; forgery to obtain the job; disclosure of industrial or commercial secrets; unlawful use of one’s position; and appointment on probation.

Second, absence has its own text, its own numbers, and a warning stage. Paragraph 7 allows dismissal “if the worker is absent without a legitimate reason for more than thirty days during a single contractual year, or for more than fifteen consecutive days, provided that the dismissal is preceded by a written warning from the employer to the worker after twenty days of absence in the first case and ten days of interruption in the second”. A business that dismissed an absentee without a timely written warning has given up its basis.

The condition of “giving the opportunity to state reasons for objecting” is a procedural requirement independent of whether the ground is sound. Where a ground is established but the worker was never allowed to answer, the procedure is open to question.

Leaving without notice while keeping full entitlements

The counterpart is Article 81: “the worker is entitled to leave the work without notice while retaining all his statutory entitlements” in cases including the employer’s failure to perform its fundamental contractual or statutory obligations, deception as to the terms and conditions of work at the time of contracting, being assigned without consent to work materially different from what was agreed, violent assault or indecent conduct, treatment marked by cruelty, injustice or humiliation, and a serious hazard at the workplace which the employer knew of and did not remove.

Paragraph 7 of the article addresses the most common situation: that the employer “by its conduct, and in particular by unjust treatment or by breaching the terms of the contract, drove the worker into the position where he appears to be the one who ended the contract”. A worker pushed into resigning is not a resigning worker under this provision, but he has to prove what pushed him.

Compensation for termination without a legitimate reason

Article 77: “unless the contract specifies compensation for its termination by one of the parties without a legitimate reason, the party harmed by the termination shall be entitled to compensation as follows: fifteen days’ wage for each year of the worker’s service, where the contract is open-ended; the wage for the remaining period of the contract, where the contract is for a fixed term”, and the compensation must not be less than “the worker’s wage for two months”.

This compensation is separate from the end-of-service award and from payment in lieu of notice. A properly drawn claim itemises all three with its own basis, rather than merging them into a single figure.

What proves the wage when it is disputed?

What is most often contested is not the fact of termination but the wage on which the award and the compensation are calculated. Article 84 sets the award at “half a month’s wage for each of the first five years and one month’s wage for each of the following years, the last wage being taken as the basis for calculating the award”. A dispute about the last wage is a dispute about the whole calculation.

Article 51 was amended by Royal Decree No. (M/44) to provide that “the employment contract shall be written in two copies, each party keeping one, and it shall be attested in accordance with the relevant statutory provisions”, and then adds a decisive rule: “the contract shall be deemed to exist even if unwritten, and in that case the worker alone may prove the contract and the rights arising from it by all means of proof, and either party may request that the contract be written at any time”.

The phrase “the worker alone” is not a stylistic detail. A worker with no written contract may prove his wage by all means of proof; the employer has no equivalent. What is gathered on this point:

• Bank credit advices showing the amount, its regularity and the transferring entity.
• Pay slips where they exist, and anything showing the basic wage and the allowances.
• Social insurance records and the wage registered in them.
• The employment contract as registered on the official platform, where it is registered.
• Correspondence that states the wage: the job offer, the promotion letter, the salary adjustment letter.

Note that Article 86 permits agreement “that all or part of commissions, percentages of sales value and similar elements of wage paid to the worker which are by their nature liable to rise and fall shall not be counted in the wage on which the end-of-service award is settled”. A worker paid on commission should read his contract before building a calculation.

When are entitlements settled?

Article 88: “where the worker’s service ends, the employer shall pay his wage and settle his entitlements within one week at most from the date the contractual relationship ends; whereas if the worker is the one who ended the contract, the employer shall settle his entitlements in full within a period not exceeding two weeks. The employer may deduct any debt owed to it by reason of the work from the amounts due to the worker.”

The period therefore depends on who ended the contract. And the right of deduction is confined to what arose “by reason of the work”, not to every financial dispute between the parties.

Three cases where the full award is due

Article 87 carves out an exception to the resignation rule: “the full award is due where the worker leaves the work as a result of force majeure beyond his control, and a female worker is likewise entitled to it if she ends the contract within six months of the date of her marriage contract or three months from the date of childbirth”.

In short

Resignation, termination on notice and dismissal are three routes whose effects do not interchange. A resignation is accepted once thirty days pass without a response, and the award is reduced according to length of service; termination on notice requires sixty days from the employer and thirty from the worker where the wage is monthly; and dismissal without the award is confined to listed cases and conditional on the chance to object.

Anyone trying to work out where they stand should start with one question: who ended the contract, and on what piece of paper? The answer determines the entitlements before any calculation begins.