United Arab Emirates

The UAE Labour Law outlines the legal requirements for notice periods during employment termination. These requirements differ slightly based on the type of employment contract.

Unlimited Contracts

For unlimited contracts, which have no set end date, the notice period is generally 30 days. This means either the employer or the employee must provide written notification of termination at least 30 days before the last working day. However, the contract itself can specify a longer notice period of up to 90 days, provided both parties agree to it.

There is a special provision for daily-paid employees on unlimited contracts:

• One week's notice if employed for at least 6 months but less than a year.
• Two weeks' notice if employed for at least one year.
• One month's notice if employed for at least five years.

Limited Contracts

For limited contracts, with a pre-determined end date, there is no statutory minimum notice period. However, if either party wishes to terminate the contract early, they must typically provide at least 30 days' notice. The employment contract can specify a longer notice period of up to 3 months, but not exceeding the contract's end date.

In both unlimited and limited contracts, employers can offer compensation to the employee in lieu of them serving the notice period. This should be mutually agreed upon and documented.

In the UAE, employees are entitled to an End-of-Service Gratuity, also known as severance pay, upon termination of their employment contract under certain conditions. The amount is determined by several factors outlined in the UAE Labour Law (Federal Law No. 33 of 2021).

Eligibility

Employees are eligible for severance pay if they meet the following criteria:

• The employee must have completed at least one year of continuous service.
• The employer has terminated the contract (with or without reason).
• The employee resigned due to a reason valid under the law.

Severance Pay Calculation

UAE severance pay is calculated based on the employee's basic salary and their length of service:

• For the first five years of service, it's 21 calendar days of basic salary for each year.
• After five years of service, it's 30 calendar days of basic salary for each additional year.
• The total gratuity cannot exceed two years of basic salary.

Situations Reducing Severance Pay

There are cases where an employee's severance pay may be reduced:

• If the employee resigns without a legal cause, their severance pay is reduced based on length of service:

  • 1-3 years of service: One-third of the entitlement
  • 3-5 years of service: Two-thirds of the entitlement
  • More than 5 years of service: Full entitlement

• An employee dismissed with a valid reason by the employer may forfeit all or part of their severance pay, depending on the dismissal reason.

Important Considerations

• Severance pay is calculated on the employee's basic salary. This generally doesn't include allowances like housing, transportation, etc.
• The employer is legally obligated to pay the gratuity within 14 days of the employee's last working day.

The lawful termination of an employee in the UAE involves specific steps aligned with the UAE Labour Law (Federal Law No. 33 of 2021).

Termination Grounds

Employers can only terminate an employee's contract for valid reasons. These include:

• Performance or disciplinary reasons: The employee displays consistent poor performance, violates company rules, or commits serious misconduct.
• Economic or business reasons: The company faces economic difficulties or structural changes that necessitate job cuts.
• Employee's reasons: The employee resigns with a valid reason as outlined in Article 121.

Termination with Notice

Both employers and employees must provide written notice of termination, adhering to the following legal regulations:

• Notice period: Generally 30 days minimum for unlimited contracts, but can be up to 90 days if agreed in the contract. For limited contracts, it's usually 30 days but can extend up to the contract end date.
• Compensation in lieu of notice: The employer may waive the notice period by offering compensation equivalent to the employee's salary for that period.

Termination Without Notice (Dismissal)

An employer can terminate an employee without notice only in extreme circumstances as outlined in Article 120. These typically include:

• Gross misconduct
• False identity or forged documents
• Significant losses caused by the employee
• Breach of workplace safety regulations
• Disclosing confidential company information

Documentation and Settlement

• Termination letter: Should clearly state the reason for termination and effective date.
• Final settlement: Includes unpaid salary, accrued leave.
• Labor ban: Employees leaving the UAE without properly settling their employment could face temporary work bans.

Disputes

If either party believes the termination is unjustified, they can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE). The MOHRE offers mediation and dispute resolution services. Cases unresolved at the MOHRE level can be referred to the courts.