UAE Redundancy Rules Clarified: Employees Must Honour Contractual Notice Period Even When Terminated by Employer

Employers in the UAE retain the legal right to require an employee to serve the agreed notice period even when the termination is based on redundancy, under the country’s current labour framework.

The issue is governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, which clearly states that either party to an employment contract may terminate the agreement for a legitimate reason, provided written notice is given and work continues during the notice period specified in the contract. The law does not recognise redundancy as a valid ground for an employee to refuse to work during this period.

Legal provisions emphasise that the notice period remains binding unless both employer and employee mutually agree to waive it. Where the employer insists on the employee serving the notice, the employee is generally required to continue working until the period expires. A unilateral refusal to do so may expose the employee to financial liability.

Under the law, the party that fails to honour the notice period must compensate the other through what is termed a “notice period allowance”. This compensation is calculated as the employee’s wage for the full notice period or the remaining portion of it, regardless of whether the breach caused actual damage.

In practical terms, if an employee declines to work the required notice after redundancy, the employer may seek recovery of the equivalent salary for that period. The usual procedure is to file a labour complaint with the Ministry of Human Resources and Emiratisation, after which the dispute may be referred to the competent court for adjudication if not settled amicably.

The legislation, however, balances employer rights with limited employee flexibility. When termination is initiated by the employer, the worker is entitled during the notice period to take one unpaid day off per week to search for alternative employment. The employee must specify the chosen day and notify the employer at least three days in advance.

Employers are therefore advised to ensure that notice period clauses are clearly stated in employment contracts and that termination communications are properly documented. Employees, for their part, should note that redundancy does not automatically release them from their contractual notice obligations unless a mutual waiver is formally agreed.

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