Employment Termination in UAE: Legal Rights, Notice Periods, Arbitrary Dismissal

In the UAE, either an employer or an employee can terminate an employment contract, provided they follow the required notice period and other legal stipulations.

Here's a comprehensive guide on when and how either party can end a contract, including situations that constitute arbitrary dismissal.

Situations for Terminating an Employment Contract

According to Article 42 of the Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector (UAE Labour Law), employment contracts can be terminated under the following circumstances:

Contract Expiry: When the contract term expires and is not renewed.

Mutual Agreement: When both parties agree in writing to terminate the contract.

Unilateral Termination: Either party can terminate the contract, provided they observe the legal provisions and notice period.

Employer’s Death: If the employer's death directly impacts the employment contract.

Employee’s Death or Disability: If the employee dies or becomes permanently unable to work, as certified by a medical authority.

Legal Penalty: If the employee receives a final court judgment with a freedom-restricting penalty of at least three months.

Closure of Business: If the establishment is permanently closed in line with UAE legislation.

Bankruptcy or Insolvency: If the employer becomes bankrupt, insolvent, or encounters exceptional circumstances that prevent business continuation.

Work Permit Issues: If the employee fails to renew their work permit for reasons beyond the employer’s control.

Notice Period for Termination

Article 43 stipulates that either party can terminate the contract for any legitimate reason with a written notice. The notice period ranges from 30 days to 90 days, depending on the agreement. During this period:

Work Continuation: The employee must continue to work as per the contract.

Wage Entitlement: The employee is entitled to full wages during the notice period.

Compensation for Missing Notice: If a party fails to serve the notice period, they must compensate the other party with an allowance equivalent to the wage for the notice period.

Job Search Leave: If the employer terminates the contract, the employee is entitled to one unpaid leave day per week to search for a new job.

The notice period can be reduced or waived if both parties agree without infringing on their rights.

Termination Without Notice by the Employer

Article 44 allows employers to terminate an employee without notice under specific conditions, such as:

False Identity or Forged Documents: If the employee adopts a false identity or submits forged documents.

Material Loss or Damage: If the employee causes significant material loss or deliberately damages the employer’s property, the employer reports this to MoHRE within seven working days.

Safety Violations: If the employee violates workplace safety instructions.

Persistent Non-performance: If the employee fails to perform essential duties despite two warnings.

Confidentiality Breach: If the employee divulges company secrets, causing losses or missed opportunities for the employer.

Intoxication or Immoral Conduct: If the employee is found drunk, under the influence of drugs, or commits immoral acts at work.

Assault: If the employee assaults the employer, manager, or colleagues.

Excessive Absenteeism: If the employee is absent without a lawful excuse for over 20 intermittent days or more than seven consecutive days in a year.

Illegal Position Exploitation: If the employee exploits their position for personal gain.

Unauthorised Employment: If the employee joins another establishment without following the proper procedures.
The employer must conduct a written investigation before terminating the employee without notice, and the dismissal notice must be justified and in writing.

Termination Without Notice by the Employee

Article 45 allows employees to terminate the contract without notice if the employer:

Breaches Contractual Obligations: Fails to meet contractual or legal obligations, and does not rectify the breach within 14 working days after notification by MoHRE.

Harassment or Assault: Assaults or harasses the employee, and the employee reports it to the authorities within five working days.

Fundamental Work Change: Instructs the employee to perform fundamentally different work without written consent, except in cases of absolute necessity.

Workplace Danger: Fails to remove grave dangers threatening the employee’s safety or health, despite being aware of it.

Arbitrary Dismissal

Article 47 defines arbitrary dismissal as termination due to the employee filing a legitimate complaint with MoHRE or a lawsuit against the employer. If proven, the court will order the employer to compensate the employee up to three months' wages and any unpaid dues such as gratuity and notice period compensation.

Changing Jobs or Working for Another Employer

Article 27 of Cabinet Resolution No. 1 of 2022 permits employees to work for another employer and obtain a new work permit after contract termination if:

* The previous contract term ends without renewal.

* The contract is terminated under Articles 42 and 45.

* The employer terminates the contract without giving a reason.

After termination or contract expiry, employees have a grace period to obtain a new work permit and residency or leave the country. Illegal residents face fines or deportation.

For more information on grace periods, work permits, and residency, refer to MoHRE and the Federal Authority for Identity, Citizenship, Customs & Ports Security (ICP).

Article 8 of Ministerial Resolution No. 47 of 2022 states that an employee may be barred from obtaining a work permit for one year if they terminate the contract during the probation period without the employer breaching contractual obligations, or if a 'work abandonment' report against them is found to be true.

For detailed procedures and assistance, consult the Ministry of Human Resources and Emiratisation.