Can UAE Employers Terminate Employees During Approved Leave? What The Labour Law Says

An employer in the UAE may terminate an employee's employment contract even while the employee is on approved annual leave. However, such a decision must comply with the requirements of Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, as amended, which governs employment relationships in the private sector.

 

The law allows either an employer or an employee to terminate an employment contract for a legitimate reason, provided the other party receives written notification. However, when termination takes place during an employee's leave, the commencement of the notice period is subject to a specific statutory provision.

 

Under Article 35 of the Employment Law, if either party decides to terminate an employment contract while the employee is on leave, the notice period agreed upon in the employment contract does not begin until the day following the employee's scheduled return from leave, unless both parties agree otherwise. Consequently, an employer cannot ordinarily count the employee's approved leave as part of the contractual notice period.

 

The provision ensures that employees do not lose their entitlement to the full notice period simply because their employer communicates a termination decision while they are away from work. It also applies when an employee chooses to resign during an approved period of leave.

 

Article 43 further establishes the conditions governing termination. Either party may end the employment relationship for a legitimate reason, provided written notice is given and the agreed notice period is observed. The notice period must be at least 30 days and cannot exceed 90 days, with the applicable duration specified in the employment contract.

 

Throughout this period, the employment contract remains in force and the employee is entitled to full wages based on the last salary received. The employee must continue performing their duties if required by the employer. However, both parties may mutually agree to waive the notice requirement or reduce its duration without affecting the employee's applicable financial entitlements.

 

If either party fails to comply with the agreed notice period, the other may be entitled to compensation in lieu of notice. This payment is calculated according to the employee's wage for the entire notice period or the unserved portion, as applicable.

 

An employee who believes that the termination was unlawful or that the employer has failed to honour statutory entitlements may approach the Ministry of Human Resources and Emiratisation (MoHRE) to register a labour complaint.

 

The legal position is therefore clear: approved leave does not prevent an employer from terminating an employment contract, but it does not allow the employer to disregard the employee's statutory notice rights. Unless both parties agree otherwise, the notice period begins only on the day following the employee's scheduled return from leave.