Understanding the differences between termination and resignation: what every chief human resources officer should know

Defining termination and resignation in the workplace

Clarifying Employee Exits: Termination Versus Resignation

Understanding the difference between termination and resignation is essential for every chief human resources officer. Both terms refer to an employee leaving a job, but the circumstances, legal implications, and management strategies differ significantly. Misunderstanding these concepts can lead to confusion, legal risks, and challenges in maintaining a healthy work environment.

• Termination occurs when the employer ends the employment relationship. This can be due to performance issues, misconduct, redundancy, or other business reasons. The employee is considered fired, and depending on the situation, may be eligible for severance pay or unemployment benefits. Termination can be voluntary (mutual agreement) or involuntary (employer's decision).
• Resignation is when an employee chooses to leave their position. This is a voluntary act, often accompanied by a notice period as outlined in the employment contract or company policy. Employees resign for various reasons, such as career growth, dissatisfaction, or personal circumstances.

There are also nuanced situations like constructive dismissal, where an employee resigns due to intolerable work conditions created by the employer, which may be treated as a form of wrongful termination under employment law. Understanding the difference between resignation and termination is crucial for protecting both employee and employer rights, especially when it comes to notice periods, severance pay, and legal rights on the job.

HR leaders must also be aware of the signs that may indicate whether an employee is resigning voluntarily or if there are underlying issues such as discrimination or breaches of privacy policy. These distinctions affect not only the legal aspects but also the management of the employment relationship and the company’s reputation.

For a deeper dive into related workplace challenges, such as insubordination and its impact on the employment system, you can explore this guide on understanding insubordination in the workplace.

As we move forward, it is important to consider the legal implications of both resignation and termination, including how law firms and HR partners can support compliance with employment law and ensure fair treatment for all employees.

Legal implications for chief human resources officers

Understanding Legal Risks and Obligations

For chief human resources officers, navigating the legal landscape around employment termination and resignation is essential. The difference between resignation and termination is not just a matter of how an employee leaves a job; it can have significant legal implications for both the employer and the employee. Understanding these distinctions helps protect the organization from claims of wrongful termination, discrimination, or constructive dismissal.

• Termination often involves the employer ending the employment relationship, sometimes due to performance issues, restructuring, or misconduct. In these cases, employment law requires careful documentation and adherence to notice periods, severance pay, and privacy policy standards.
• Resignation occurs when an employee chooses to leave their position. While this may seem straightforward, issues can arise if the employee claims they were forced to resign, which could be considered constructive dismissal under the law.

Legal rights and obligations differ depending on whether an employee is fired or resigns. For example, employees who are terminated may be eligible for unemployment benefits, while those who resign typically are not, unless they can prove a hostile work environment or breach of employment contract. Employers must also ensure compliance with anti-discrimination laws and avoid any appearance of retaliation or unfair treatment.

HR management systems and law firm partners can provide guidance on best practices, but it is the responsibility of the chief human resources officer to ensure that all actions align with employment law and the organization’s privacy policy. This includes providing clear communication about notice periods, documenting the story of the employee’s performance, and understanding the legal difference between resignation and termination.

For more on navigating the complexities of HR compliance and legal processes, see this resource on understanding delays in HR training approvals.

Impact on company culture and morale

How exits shape the work environment and team morale

When an employee leaves a job, whether through resignation or termination, the impact on company culture and morale can be significant. The way an employer handles these transitions sends a strong signal to remaining employees about the organization’s values, management style, and respect for individual rights. If an employee is fired without clear communication or due process, it may raise concerns about wrongful termination, discrimination, or constructive dismissal. On the other hand, a transparent resignation process, with proper notice periods and support, can reinforce trust in the employment system.

• Resignation: When an employee resigns, it is often seen as a personal decision. However, frequent resignations may be a sign of deeper issues within the work environment, such as poor management, lack of growth opportunities, or unclear employment contracts. High turnover can erode team cohesion and create uncertainty about job security.
• Termination: Termination, especially if perceived as unfair or abrupt, can damage morale and lead to anxiety among remaining staff. Employees may worry about their own performance, legal rights, or the risk of being next. This is why it’s crucial for human resources to ensure that the process follows employment law and respects privacy policy requirements.

Both resignation and termination affect the employment relationship and can influence how employees view management and the company as a whole. The difference between resignation and termination is not just legal—it’s also about how people feel about their workplace. A supportive approach, including severance pay where appropriate and clear communication about legal rights and unemployment benefits, helps maintain trust and stability.

Chief human resources officers play a key role in guiding managers and teams through these transitions. They must balance the needs of the business with the rights of employees, ensuring that every exit—whether voluntary or involuntary—is handled with professionalism and empathy. For more on how leadership can support teams during these changes, see this resource on key responsibilities of a team leader.

Communication strategies for employee exits

Clear and Respectful Exit Conversations

Effective communication is essential when an employee is leaving a job, whether through resignation or termination. The way an employer handles these conversations can significantly impact the employment relationship, future legal risks, and the company’s reputation. It is important for management and human resources to approach these discussions with empathy and clarity, ensuring that both the employee and the organization understand the reasons and next steps.

• Prepare in advance: Review the employment contract, performance records, and any relevant legal rights before meeting with the employee.
• Choose a private, neutral setting to respect the employee’s privacy and dignity.
• Communicate the decision or acknowledge the resignation clearly, avoiding ambiguous language that could lead to misunderstandings about whether the departure is a resignation or a termination.
• Explain the process for notice periods, severance pay, unemployment benefits, and any other entitlements under employment law or company policy.
• Listen to the employee’s perspective and allow them to share their story. This can help identify signs of constructive dismissal, discrimination, or wrongful termination.

Maintaining Legal and Ethical Standards

Human resources leaders must ensure that all communications about leaving a position comply with employment law and the organization’s privacy policy. This includes providing written documentation of the resignation or termination, outlining the difference between resignation and termination, and clarifying the employee’s legal rights. Avoid making statements that could be interpreted as discriminatory or retaliatory, as these can lead to legal claims and damage the work environment.

Supporting the Transition for All Parties

Communication doesn’t end with the departing employee. Management should also inform relevant partners and teams about the change in a way that maintains confidentiality and morale. This helps prevent rumors and supports a healthy system for future employment transitions. Open and honest communication, combined with a clear explanation of the process, helps reinforce trust and stability during periods of change.

Best practices for exit interviews and feedback

Making Exit Interviews Count for Both Sides

Exit interviews are a crucial part of the employment relationship, especially when an employee resigns or is terminated. For chief human resources officers, this process is not just about collecting feedback, but about understanding the difference between resignation and termination, and using that knowledge to improve the work environment. A well-structured exit interview can reveal signs of constructive dismissal, discrimination, or wrongful termination. It can also help management identify patterns that may be affecting employee retention or performance. Here are some best practices to ensure exit interviews are meaningful:

• Ensure privacy and confidentiality: Employees should feel safe sharing their story without fear of retaliation. Refer to your privacy policy and employment law obligations to protect their legal rights.
• Use a consistent system: Whether the employee is leaving the job voluntarily or being fired, use a standardized set of questions to compare feedback across resignation and termination cases.
• Ask about the work environment: Questions should address management style, job expectations, and any issues related to discrimination or unfair treatment. This helps identify if there are risks of constructive dismissal or wrongful termination.
• Discuss notice periods and severance pay: Clarify if the employee received proper notice or severance according to their employment contract and employment law. This is especially important in cases of termination resignation or when an employee resigns under pressure.
• Document feedback for legal and strategic use: Keep records in line with legal requirements. Insights from exit interviews can support future decisions about employment, partner relations, and management training.

Turning Feedback Into Action

The value of exit interviews is realized when feedback leads to positive change. Chief human resources officers should analyze data for trends, such as frequent resignations from a particular department or recurring complaints about a manager. This information can inform updates to the employment contract, improvements in the notice system, or targeted training to prevent future issues. It is also important to communicate findings with leadership, while respecting employee privacy. Sharing anonymized insights can help the employer and management team address root causes and enhance the overall employment experience. In some cases, consulting with a law firm may be necessary to ensure compliance with employment law and to protect against legal risks such as wrongful termination claims or disputes over unemployment benefits. By treating exit interviews as more than a formality, chief human resources officers can strengthen the organization’s culture, reduce the risk of legal challenges, and support a healthier, more transparent employment system.

Supporting managers and teams during transitions

Guiding Managers Through Employee Departures

When an employee leaves a job—whether through resignation or termination—the role of the chief human resources officer (CHRO) extends beyond compliance and legal considerations. Supporting managers and teams during these transitions is crucial for maintaining a healthy employment relationship and minimizing disruption in the work environment.

• Clear Communication: Managers should be equipped with guidance on how to communicate the departure to their teams. This includes respecting privacy policy requirements and avoiding details that could breach confidentiality or employment law. Open, honest communication helps prevent rumors and maintains trust.
• Understanding Legal Rights: Managers need to be aware of the legal rights of both the departing employee and the employer. This includes notice periods, severance pay, and the difference between resignation and termination. Providing managers with resources or access to a law firm partner can help them navigate complex situations, such as constructive dismissal or wrongful termination claims.
• Supporting Team Morale: The departure of an employee—especially if they were fired or resigned under difficult circumstances—can impact morale. Encourage managers to check in with their teams, address concerns about discrimination or performance management, and reinforce the company’s values and support systems.
• Transition Planning: Managers should have a clear plan for redistributing tasks and responsibilities. This minimizes disruption and helps remaining employees feel secure in their roles. CHROs can assist by providing templates or checklists for transition planning.
• Encouraging Feedback: After an employee resigns or is terminated, managers should be encouraged to participate in exit interviews and gather feedback. This helps identify systemic issues in the employment system and can inform future management practices.

Empowering Teams to Adapt

Employee exits can be a sign of broader organizational changes or challenges. CHROs should work closely with management to ensure that teams understand the reasons behind departures, within the limits of privacy and legal obligations. Offering support—such as counseling or additional training—can help employees process the change and maintain a positive work environment.

Ultimately, the CHRO’s role is to partner with management, ensuring that both legal and human aspects of employment transitions are handled with care. This approach not only protects the organization from legal risks but also strengthens the overall employment contract and fosters a resilient, engaged workforce.