Does Final Settlement Differ If You're Terminated vs. Resign?
October 23, 2026
Under current UAE law, the core components of a final settlement — gratuity, leave payout, unpaid wages — apply the same way whether an employee resigns or is terminated. The main practical difference tends to be around notice: who initiated the exit and whether proper notice was given or paid in lieu.
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Gratuity is calculated the same way under the current law (per the official u.ae guidance), without a resignation-specific reduction. Leave encashment and unpaid wages are owed regardless of who initiated the exit, since they represent accrued and earned entitlements rather than a penalty or reward tied to the exit type.
Where the Practical Difference Shows Up
In a termination, the employer typically initiates and may owe notice pay in lieu if notice isn't given. In a resignation, the employee is the one responsible for giving proper notice, and a shortfall on their side creates the deduction covered in a separate article. Either direction, the same notice math applies — just with the obligation falling on the party who didn't fulfil it.
Frequently Asked Questions
Does gratuity differ between resignation and termination?
Under current UAE law, the official guidance doesn't describe a resignation-specific reduction — the same Article 51 formula applies either way.
Is leave encashment affected by exit type?
No — accrued unused leave is owed regardless of whether the employee resigned or was terminated.
What's the main practical difference between the two?
Which party is responsible for the notice period — an employer-initiated termination without proper notice creates employer liability, while an employee resigning without full notice creates the shortfall deduction.
Is arbitrary dismissal treated differently?
Arbitrary (unjustified) dismissal can carry additional legal consequences beyond the standard final settlement — this is a more specific legal scenario worth confirming with MOHRE or legal counsel if it applies.