Termination of Employment in the UAE
1) What types of employment termination are there?
Employment may be terminated by mutual written agreement, upon the expiry of its fixed term, or at the request of either party if legal requirements or notice periods are met. It also ends automatically in cases such as the death of either party (in specific circumstances), permanent disability of the employee, or a final court judgment with a custodial sentence of three months or more. Employment termination can also occur due to business-related reasons, for instance, permanent company closure.
Legal basis: Article 42 of Federal Law No. 33 of 2021 regarding the Regulation of Labor Relations.
2) What are the legal grounds for termination initiated by the employer?
The legal grounds for termination initiated by the employer include serious misconduct such as impersonation, submitting forged documents, or disclosing confidential work-related information. Employers can also terminate employment in cases where employee commits error(s) causing significant material loss, violates workplace safety rules, fails to perform duties despite warnings, or is found intoxicated or under the influence of substances during work hours. Other grounds include repeated absenteeism without valid reasons, exploiting the job for personal gain, engaging in workplace violence, or violating regulations when transitioning to another establishment.
Legal basis: Article 44 of Federal Law No. 33 of 2021 regarding the Regulation of Labor Relations.
3) What are the legal procedures required for terminating an employee?
To terminate an employee, the employer must give a 30 to 90-day notice, cancel the work permit with the Ministry, pay any fines for delays in issuing or renewing the permit, and confirm the employee has received all entitlements. Additional procedures may apply as required.
Legal basis: Article 7 of the Executive Regulations of Federal Law No. 33 of 2021 regarding the Regulation of Labor Relations.
4) What are the mandatory notice periods for termination?
The mandatory notice period for terminating an employee’s service must be no less than 30 days and no more than 90 days.
Legal basis: Article 43 of Federal Law No. 33 of 2021 regarding the Regulation of Labor Relations.
5) What severance pay and compensation are employees entitled to?
Full-time employees with one year or more of continuous service are entitled to an end-of-service gratuity based on their basic salary. The gratuity is calculated as 21 days’ basic salary for each of the first five years and 30 days’ basic salary for each additional year. Unpaid leave is not included in the service duration, and deductions may be made for any legally owed amounts. On the other hand, gratuity of employees working under alternative employment models (other than full-time) is calculated based on their working hours compared to full-time hours.
End-of-service gratuity does not apply to temporary employment arrangements if the duration is less than one year.
Other than end-of-service gratuity, employees may also be entitled to fair compensation for work injuries, occupational diseases, or unlawful termination. In the case of death, the family receives the compensation.
Legal basis: Articles 37 and 47 of Federal Law No. 33 of 2021 on the Regulation of Labor Relations.
6) How should employers handle termination due to poor performance or misconduct?
Employers can terminate an employee during the probationary period with at least 14 days’ written notice. Probation must not exceed 6 months. Post probation, employers may impose disciplinary actions for poor performance or misconduct include written warnings/notices, wage deductions, suspension, withholding raises or promotions, and termination with the employee’s end-of-service gratuity intact. Such actions must align with the legal framework under Federal Law No. 33 of 2021.
Legal basis: Article 39 of Federal Law No. 33 of 2021 on the Regulation of Labor Relations.
7) What legal recourse is available to employees in case of unlawful termination?
In case of unlawful termination, employees can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE) to seek fair compensation considering the nature of the work, the extent of damages and length of service; as well as notice period allowance, and end-of-service gratuity. If the employee disagrees with the Ministry's decision, they can escalate the matter to a competent court for further resolution.
Legal basis: Article 47 of Federal Law No. 33 of 2021 regarding the Regulation of Labor Relations.
8) What is the procedure for terminating an employment contract with foreign nationals?
To terminate an employment contract with foreign nationals, the employer must provide a notice period of 30 to 90 days, submit a request to cancel the work permit, and pay any applicable fines. The employer must also confirm that the employee has received all entitlements and follow any additional procedures set by the Ministry. Additionally, the employee's residency permit must be cancelled with the Federal Authority, which grants a grace period for the employee to leave or adjust their status.
Legal basis: Based on the provisions of Federal Law No. 33 of 2021 and its Executive Regulations regarding the Regulation of Labor Relations.
Author: Issam Dahman
