In the UAE, employment termination is governed by Federal Decree-Law No. 33 of 2021, outlining the conditions under which a contract can be ended. This law ensures the protection of both employer and employee rights.
While for employers, compliance with these rules is essential to avoid disputes, penalties, or claims of wrongful dismissal, awareness of employees about these rights ensures they receive their full benefits. So, ultimately, understanding of these provisions leads to handling workforce end-of-employment challenges confidently.Â
What Is Employment Termination in the UAE?
Employment termination in the UAE refers to the legal process of ending the employment relationship between an employer and an employee.
Termination of employment in UAE is governed by the UAE Labour Law, specifically Federal Decree Law No. 33 of 2021. It outlines the rights and obligations of the employer and employees during termination. Key provisions include-Â
- Article 42 describes the cases of termination of the employment contract.Â
- Article 43 mentions the termination period not less than thirty (30) days, and not more than ninety (90) days.
- Article 44 allows employers to terminate an employee’s contract without notice under specific circumstances.
- Article 45 allows employees to terminate their employment without notice if the employer fails to fulfill their contractual obligations.
- Article 46 inhibits the employer from terminating their employees due to a lack of health fitness.Â
What Are the Different Types of Employee Termination in the UAE?
According to the UAE labor law, employee contracts can be terminated in various ways with specific legal implications. Here is an overview.Â
Dismissal for Cause
In the UAE, the employer can dismiss the employee without warning for serious misconduct, failure to perform duties, engaging in immoral activities, and absenteeism exceeding the limits. In such cases, a written investigation must be conducted, and the dismissal decision should be justified.Â
Mutual Agreement
In the UAE, both employers and employees decide on the employment before its natural expiration with mutual agreement. It should be documented to ensure clarity and to avoid future disputes.
Expiry of Fixed-Term Contracts
Expiry of the fixed-term contracts is a valid reason for dismissal in the UAE. Moreover, employees on fixed-term contracts can be dismissed on notice now. It won’t require to fulfill additional compensation to be payable.Â
Resignation
Employees can voluntarily terminate their employment by submitting a written resignation within a notice period ranging from 30 to 90 days. During this period, the employees are entitled to their full salary according to the last wage received, and they must work during that notice period if their Employer asks them to do so.
What Are the Grounds for Termination of Employment in the UAE?
In the UAE, an employment contract can be terminated by the employer and employees for several reasons.
Employer-Initiated Termination
According to Article 44 of the UAE labor law, the employer can dismiss the employee without notice for the following cases.Â
- When the employee impersonates someone or uses false documents.Â
- When the employee causes serious financial loss or damage to the company property.Â
- When the employee ignores written workplace safety rules.
- When the employee fails to perform his basic duties.Â
- If the employee shares the company secret, causing loss to the company, or for personal gain.Â
- If they are found drunk or under the influence of a narcotic or psychotropic substance during work hours.Â
- If the worker physically or verbally assaults in the course of his work.Â
- Absenteeism without a valid reason for over 20 non-consecutive days or more than 7 consecutive days.
- If he misuses his job for personal benefits.
- If he works for another company without following the legal procedure.
Employee-Initiated Termination
According to Article 45 of the UAE labor law, the employees retain the right to termination of employment for any of the following cases.Â
- The employer breaks the contract or legal obligations.Â
- The employer or their representatives harass or use violence against the worker.
- The workplace poses a danger to the safety and health of the employees.Â
- The employer assigns the worker work that is fundamentally different from the work agreed on in the employment contract without the written consent.Â
Termination Due to Illness or Death
Under Article 42 of Federal Decree-Law No. 33 of 2021, the employer can terminate the contracts of an employee for total permanent disability. It should be proven by a certificate issued by the Medical Authority. In the same article, the law mentions that an employment contract automatically terminates upon the death of the employee.Â
Termination of UAE Nationals vs. Non-Nationals
Ground for termination of employment in the UAE is generally the same for both UAE nationals and non-nationals. However, there is an additional consideration for non-nationals according to Article 42. It says termination of non-nationals can occur if they fail to meet work permit or visa renewal requirements.Â
What Are the Employee Termination Rules in the UAE?
In the UAE, terminating an employee requires adherence to the rules outlined in the employment contract, ensuring fair and lawful termination practices in the workplace. These guidelines help maintain transparency and protect both employers and employees throughout the process.
Requirements for the Notice Period
The notice period for employment termination must be between 30 days to 90 days as specified in the employment contract. When the contract ends, the job also ends; unless both the employer and employee agree to extend or renew it according to the law.
With-Cause Termination
The employer can terminate the employment if the employee commits one of the serious breaches. For with-cause termination, the employer must conduct a written investigation into the alleged cause. If the employer causes grave material loss, the employer must inform the MoHRE within seven business days of becoming aware of the incident.
Severance Pay (End-of-Service Benefits)
As mentioned in Article 51, the national UAE workers are entitled to have end-of-service benefits upon the end of their service. As for the foreign worker, they will get the end-of-service benefits if they have completed one or more continuous services.
Termination Pay and Benefits
In the UAE, the national workers get the end-of-service pay and benefits according to the legislation regulating pensions and social security in force in the State. The end of service of the foreign worker will be calculated according to the basic wage. It will be as follows.Â
- 21 working days’ wage for each year of the first 5 years of service
- 30 working days’ wage for each year in excess of that.
- The days of absence from work without pay will not be included in this calculation, and the total end-of-service gratuity for the foreign Worker must not exceed two years’ wages.Â
Here, the employer needs to pay all the wages and end-of-service benefits within 14 days of the end of the contract. If the employer fails to do so, the employee can complain to the MoHRE.Â
Required Documentation for Termination Processes
Here is what documentation for the termination process is required for different cases.Â
- Termination letterÂ
- Written investigation report if terminating without notice [Article 44]
- Warning letters are sent twice when the employee fails to perform basic duties. [Article 44]Â
- Medical certificate for permanent disability, unfit for work, or death [Article 42]
- Notice of termination
Protection for Special Worker Categories
According to Article 30(8) of the UAE labor law, it is not permissible to terminate or give notice of termination to the female worker because of pregnancy, maternity leave, or their absence from work under maternity leave. If any contractual term takes away the legal worker protections, it will be null and void unless it is more beneficial to the Worker (Article 65).
Policy for Job Cuts and Redundancies
Article 42 of the UAE Labour Law allows termination for economic or exceptional reasons. For instance, employer bankruptcy, insolvency, or permanent business closure.
However, employers still need to respect the contractual notice period of 30–90 days. Moreover, Article 47 mentions that if job cuts are made unfairly, workers may claim arbitrary dismissal compensation of up to three months’ wages.Â
Law for Wrongful Termination
Arbitrary Dismissal occurs if the termination of the employee happens because they have filed a serious complaint with MoHRE or filed a valid legal claim against their employer.Â
If the dismissal is found to be arbitrary, the employer has to pay fair compensation to the employee estimated by the competent court. The compensation should not exceed three months’ wage of the employee according to the last wage received.Â
Termination During Probationary Period
Under Article 9(1), the probation period is a maximum of six months. During this probation period, the employer can’t terminate an employee without notice.Â
According to Article 9, the employer must need to notify the worker 14 days before the date specified for termination of service. If the employee wants to resign during probation to work for another employer in the UAE, they must give written notice at least one month before.Â
What Is the Employee Termination Process in the UAE?
The UAE labor law has set well-defined rules that both the employer and employee need to follow for the termination of employment.Â
Employer’s Responsibilities When Terminating An Employee
Here is a quick overview of the employer’s responsibilities in this regard, according to the law.Â
- The employer needs to provide written notice at least 30 days and not more than 90 days for terminating the employment contract.Â
- During this notice period, the employer will need to pay the employee their full wage.
- He also needs to settle with the employees for end-of-service benefits, unused leave, and any other entitlements.
- At last, he should complete all the necessary exit procedures, like canceling the work permit of the employee.Â
- The employer should also provide a certificate of employment upon request.
Steps Employees Must Follow If Terminated
The following are the steps the employee must follow if terminated.Â
- The employee should review the termination notice to understand the cause.Â
- If the termination is arbitrary or violates their rights, the employee should file a complaint with MoHRE.
- Moreover, employees should ensure that they get their final settlement. It includes end-of-service benefits, unused leave, and any other dues. He should address any discrepancies with the employer or MoHRE.
Employee Termination Letter Sample UAE
Here is a sample of a UAE employee termination letter for a quick review.
Should You Resign or Wait For Termination?
In the UAE, the employee can resign at any time, providing a notice of usually 30 days before. Here, he can resign without notice if only the employer breaches contractual or legal obligations. An employee can also formally resign even after receiving a termination notice. However, he must follow the legal rules in all cases.Â
What Are the Post-Termination Rights and Procedures in the UAE?
In the UAE, the expatriate employees have the right to get repatriation and a grace period. Moreover, he can also get a certificate of service upon request.
Working for Another Employer After Termination
After the termination of the employment contract, the employees are entitled to a 30-day grace period from the date of cancellation. During this period, he can either obtain a new work and residence permit or leave the country.Â
The employee can also work for another employer if the contract ends in accordance with the Labour Law and its regulations. In such cases, the employee can transfer their work permit to a new employer.
Repatriation and Relocation Benefits
In the UAE, repatriation benefits are legally mandated under Article 131 of the UAE Labour Law. It mentions that the employer must cover the costs of repatriating an employee to their home country or another agreed location upon termination.Â
It includes travel tickets, family travel, and luggage shipment. Employers may provide a bank guarantee to secure payment of repatriation expenses and other dues. However, if the termination is for the employee’s fault, he should bear the repatriation at their own expense.Â
As for relocation benefits, the UAE labor law doesn’t mandate them. If the employment contracts mention a housing allowance, he will receive that allowance.
Certificate of Service
The employer should provide an end-of-service certificate free of charge at the end of his service and at the employee’s request. It should include:
- Date of appointment
- Date of termination
- Reason for terminationÂ
- Total period of service
- Nature of work performed by himÂ
- His last pay plus allowances, if any.
- Moreover, the employer should return any Certificates or diplomas belonging to the employee.Â
Final Thoughts
In the UAE, employers and employees need to understand their rights and responsibilities under the UAE labor law to ensure lawful termination. Strict adherence to the legal requirement for termination protects the rights of both employer and employee. It also prevents disputes and ensures a compliant termination process.Â
So, you should stay informed and claim all due entitlements if you are facing termination. Seek assistance from MoHRE if your rights are violated.
