Lost Your Job Over Performance in UAE? What The Law Says About Notice Periods, Gratuity and Final Dues

Employees in the UAE who are terminated due to performance-related issues often question whether the reason for dismissal affects their notice period or entitlement to end-of-service benefits. Under the country’s current employment framework, the law draws a clear distinction between termination for legitimate reasons such as performance and dismissal for misconduct, with specific rights and obligations attached to each.

 

The UAE labour law allows either an employer or an employee to terminate an employment contract for a legitimate reason, provided written notice is served and the agreed notice period is fully observed. During this period, the employee is generally required to continue performing their duties unless the parties agree otherwise. The law sets strict limits on the duration of notice, requiring it to be no less than 30 days and no more than 90 days.

 

Crucially, the reason for termination -- including poor performance -- does not alter the statutory notice period. Instead, the applicable duration is governed by the terms of the employment contract, as long as those terms comply with the minimum and maximum thresholds prescribed by law. The same notice requirements apply whether the termination is initiated by the employer or the employee, provided it does not fall under cases of summary dismissal linked to misconduct.

 

End-of-service benefits, commonly referred to as gratuity, are treated separately and are determined solely by the length of continuous service rather than the grounds for termination. Under UAE law, an employee becomes eligible for gratuity only after completing at least one year of uninterrupted service with the same employer. Employees whose service ends before completing one full year are not entitled to gratuity, even if the termination is initiated by the employer.

 

For employees who meet the minimum service requirement, gratuity is calculated based on the basic salary. The law provides for an entitlement equivalent to 21 days’ basic wage for each year of service during the first five years of employment, and 30 days’ basic wage for each additional year beyond that period. These calculations apply to full-time foreign employees and are payable upon the end of the employment relationship.

 

In addition to gratuity, employers are legally required to settle all outstanding financial entitlements promptly after the termination of employment. This includes unpaid wages, accrued but unused annual leave, and any other dues stipulated under the employment contract, company policies or applicable regulations. The law imposes a strict deadline of 14 days from the date of termination for employers to complete the final settlement.

 

Failure to pay these amounts within the prescribed timeframe may give rise to a legal dispute. Employees are encouraged to first raise the matter directly with their employer. If the issue remains unresolved, the complaint may be escalated to the Ministry of Human Resources and Emiratisation, which has the authority to intervene and facilitate resolution in accordance with the law.

 

In summary, while performance-related termination may feel subjective, the UAE’s labour law provides uniform protections when it comes to notice periods, gratuity eligibility and final settlements. Employees are advised to review their employment contracts carefully and ensure their rights are honoured in line with the statutory framework.

 

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