UAE Labour Law Clarifies Employee Rights, Ensuring Compensation for Dues and Notice Pay When Firms Close During Probation

The UAE’s labour framework has undergone significant modernisation in recent years, offering clearer guidance on employment rights and obligations. One of the recurring concerns among workers, especially new joiners, is the question of entitlements when an employer shuts down operations unexpectedly -- particularly during the employee’s probation period.

Can a worker claim compensation or end-of-service benefits if the company closes before completing probation? The latest provisions of the UAE Labour Law provide clear answers.

Termination During Probation: What the Law Says

Under Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, employers in the UAE have the right to place new employees on a probation period of up to six months. During this time, the employer may terminate the employee, but only by providing a minimum of 14 days’ written notice.

Article 9 of the law specifically states that an employee may be dismissed during probation only after receiving written notification at least 14 days before the termination date. This requirement applies regardless of the employer’s financial condition or plans to shut down the business.

Therefore, if a company ceases operations without issuing proper notice to the employee, the employer -- or the entity responsible for settling the company’s obligations -- remains liable for paying the notice period salary.

End-of-Service Benefits Are Not Payable Without One Year of Service

One of the most common misconceptions among new employees is that company closure automatically triggers some form of compensation. However, UAE law is explicit: end-of-service gratuity is payable only after completing at least one full year of continuous employment.

Article 51 of the Employment Law clarifies that full-time foreign workers become eligible for gratuity only upon completing one year of service, calculated as:

• 21 days of basic salary for each year of service during the first five years;
• 30 days of basic salary for each subsequent year.
  

If an employee is terminated during probation — and therefore before completing one year -- no gratuity payment applies, even if the termination is abrupt or due to company closure.

What Employees Are Entitled To

Even though gratuity does not apply, employees still retain rights that must be honoured. When a company shuts down or terminates employment during probation, the employer remains responsible for settling all dues, including:

• Unpaid salary up to the final working day
• Payment for any accrued annual leave, if applicable
• Salary in lieu of the 14-day mandatory notice period, if the employer failed to issue proper notice
  

If the closure happened suddenly and employees were not given written notice in advance, the employer must still compensate them for the statutory notice period.

How Employees Can Claim Their Rights

Employees who do not receive their dues may file a complaint with the Ministry of Human Resources and Emiratisation (MoHRE), which oversees labour disputes and ensures compliance with the Employment Law. MoHRE can intervene to secure salary payments, notice period compensation, and any other outstanding entitlements.

A Clearer Legal Framework for Worker Protection

The UAE continues to enhance transparency and fairness in its labour market. The current legal framework ensures that even probationary employees -- who are often the most vulnerable during corporate restructuring or closure -- receive protection under the law. While gratuity requires at least one year of service, other rights such as notice period pay and outstanding salary remain firmly guaranteed.