UAE Jobs: What Are Your Rights If a Company Shuts Down During Probation Before You Complete One Year of Service?

Joining a new job only to see the company shut down within weeks can leave employees anxious about their legal rights, especially if the termination happens during the probation period. Under UAE labour law, even probationary employees are protected by specific rules that govern termination, notice periods and the settlement of dues, although entitlement to gratuity follows a different threshold.

Under Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, employers are permitted to place new hires on a probation period of up to six months from the date employment begins. However, probation does not give employers unrestricted freedom to end contracts without consequence. If an employer decides to terminate an employee during probation for any reason, including the closure of the business, the law requires that the employee be given at least 14 days’ written notice.

If a company shuts down and employment is terminated without serving this statutory notice, the termination is still lawful, but the employer remains financially liable for the notice period. In such cases, the employee is entitled to receive salary in lieu of the 14-day notice, even if the business has ceased operations.

When it comes to end-of-service benefits, commonly referred to as gratuity, the law draws a clear line based on length of service. Gratuity becomes payable only after an employee completes at least one year of continuous service with the same employer. Employees whose contracts end before completing one year -- including those terminated during probation -- are therefore not entitled to gratuity, regardless of the reason for termination or whether the company shuts down unexpectedly.

That said, the absence of gratuity does not mean the employee walks away empty-handed. Employers are legally required to settle all dues earned up to the last working day. This includes unpaid salary, payment for any accrued but unused annual leave (where applicable), and salary corresponding to the mandatory notice period if notice was not properly served. These obligations continue to apply even if the employer’s business has closed.

If an employer fails to pay these amounts following termination, the employee has the right to seek legal recourse. Complaints relating to unpaid wages, notice pay or other employment dues can be filed with the Ministry of Human Resources and Emiratisation (MoHRE), which is empowered to intervene and ensure compliance with the labour law.

In short, while employees terminated during probation are not entitled to end-of-service gratuity unless they complete one full year of service, they are still protected by notice requirements and the right to receive all earned financial dues. A company shutdown does not extinguish these obligations under UAE law.

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