Resignation vs Termination – Complete Guide for Employees and Employers

When a job ends, it usually happens in one of two ways: resignation or termination. Both words describe the end of an employment relationship, but they are not the same as each other. Resignation occurs when an employee voluntarily decides to leave the company, while termination occurs when the employer ends the employment contract. The differences between these two can have a long impact on salary, benefits, career reputation and legal rights.

Understanding resignation vs. termination is important not only for employees but also for employers. Employees need to know how each situation affects their finances and future job opportunities. On the other hand, employers should manage these processes carefully to avoid disputes, lawsuits, or negative image of the company.

In this article, we will explain in detail the meaning of resignation and termination, their key differences, financial and legal consequences, and practical guidance for both sides.

Resignation is a formal process in which an employee voluntarily decides to leave his or her job. Normally, the employee submits a resignation letter or email mentioning his or her last working day. This gives the employer time to prepare for the transition.

Most industries have a standard two-week notice period, but it may vary according to company policy or employment contract.

1- Reasons for Resignation

Employees resign for a variety of reasons, such as:

• Accepting better job offer/career opportunity.
• Relocation – Shifting to some other city or country.
• To improve work-life balance.
• To pursue higher education or personal growth.
• Dissatisfaction with salary, management or company culture.

Resignation is generally considered a professional decision. If it is handled correctly, the employee has a chance to leave the company on positive and good terms.

2- Types of Resignation

1. Voluntary Resignation – When the employee decides to leave the job on his own will.
2. Forced Resignation – When the employer puts pressure on the employee to resign so that the termination is not officially recorded. In legal terms this is also called “constructive dismissal”.
3. Resignation with Notice – When the employee resigns after giving proper notice period, so that there can be a smooth handover.
4. Immediate Resignation – When the employee resigns immediately without giving any notice, usually due to emergencies or serious conflicts.

3- Benefits of Resignation for Employees

• Control over the decision – Employee himself decides when and why to leave.
• Chance to maintain positive relationships – It is possible to say goodbye to the employer on good terms.
• Easier job interviews – Saying “Career growth” or “better opportunity” sounds more professional than being “fired”.
• Benefit of benefits – Sometimes unused leave or encashment of benefits can also be received.

4- Drawbacks of Resignation

• Severance pay is not given – Normally employees are not provided severance package on resignation.
• Loss of unemployment benefits – In some regions, if an employee resigns, he is not eligible for unemployment benefits.
• Issue of notice period – If the employee does not serve the notice period, the employer can stop the final dues.

Termination means when the employer decides to end the contract of the employee. Unlike resignation, it is not voluntary. Termination can sometimes happen with notice and sometimes without notice – it mainly depends on the reason for termination and local labor laws.

1- Types of Termination

1. Firing (For Cause Termination) – Happens when the employee violates company policies, engages in misconduct, or consistently underperforms.
2. Layoff (No-Fault Termination) – Employer lets employees go due to financial challenges, restructuring, or downsizing.
3. Wrongful Termination – Occurs when an employer fires someone for illegal reasons, such as discrimination or retaliation.
4. Mutual Termination – Both employer and employee agree to part ways.

2- Consequences of Termination for Employees

• Possible eligibility for severance pay, depending on company policy.
• May qualify for unemployment benefits in many countries.
• Risk of reputational impact if termination was for misconduct.
• Potential difficulty explaining the termination to future employers.

3- Consequences for Employers

• Labor laws compliance – The employer must ensure that termination is legal so that there are no wrongful termination claims.
• Giving final settlements – The employer is obliged to pay unpaid wages, gratuity, and contractual dues to the employee.
• Reputation risk – If termination is handled incorrectly, the company’s image can be damaged.

While both resignation and termination lead to the end of employment, their differences affect finances, reputation, and future opportunities.

1. Initiator of Separation

• Resignation → Employee’s decision.
• Termination → Employer’s decision.

2. Notice Period

• Resignation usually involves a notice period (commonly 2 weeks).
• Termination may be immediate in cases of misconduct, but layoffs sometimes include advance notice.

3. Compensation

• Resignation: Final salary + encashed leave. No severance.
• Termination: Final salary + severance pay (in many cases).

4. Legal Implications

• Resignation rarely leads to legal disputes.
• Termination can result in lawsuits if found wrongful.

5. Career Impact

• Resignation is easier to explain positively in interviews.
• Termination can raise concerns but layoffs are often neutral.

The impact of resignation or termination does not end on the last working day—it carries forward.

• Financial Impact → Severance pay vs. no severance.
• Reputation Impact → Voluntary exit looks stronger on resumes.
• Unemployment Benefits → Usually available after termination, not resignation.
• Legal Standing → Wrongful termination can open legal remedies, while forced resignation may also be challenged.

The debate of resignation vs termination comes down to control, consequences, and future opportunities. Resignation offers employees autonomy and a cleaner career narrative, while termination—though sometimes unavoidable—requires careful handling by employers to remain lawful and ethical.

For employees, the best approach is to resign professionally, give notice, and leave on good terms. For employers, the priority is to manage both resignations and terminations fairly, ensuring compliance with laws and protecting company reputation.

In today’s job market, both processes are common. What matters most is understanding the difference, knowing your rights, and taking steps that secure your professional future.