Terminating employment contracts and arbitrary dismissal

Either party can terminate an employment contract provided he/she serves notice and complies with other legal consequences of the termination. Read when either party can end a contract without notice. It would be considered arbitrary dismissal if the employer terminates an employee because the latter filed a legitimate complaint with MoHRE or a lawsuit against the employer.
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Situations in which an employment contract may be terminated

Following are the situations in which an employment contract may be terminated as per Article 42 of the Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, the ‘UAE Labour Law’:

  1. if the term of the contract expires and is not, extended or renewed
  2. if both, the employer and employee mutually agree in writing to end it
  3. if either party wishes to end it, provided that the terminating party observes the provisions of termination of the employment contract and the notice period agreed upon (details below)
  4. in the event of the employer’s death if the subject of the contract is related to its entity
  5. in the event of the worker’s death or full permanent inability to work, based on a certificate issued by a medical entity
  6. where a worker faces a final court judgement of a freedom-restricting penalty for a period of not less than three months
  7. if the establishment is closed permanently, in accordance with the legislations in force in the UAE
  8. if the employer becomes bankrupt or insolvent, or faces any economic or exceptional reasons that prevent the continuation of the project
  9. if the worker fails to fulfil the conditions for renewing the work permit for any reason beyond the control of the employer.

 

Notice period of termination

Article 43 provides that either party in the employment contract can terminate the contract for any ‘legitimate reason’, provided that:

  1. a written notification is given to the other party and
  2. the terminating party serves a notice of 1 month (30 days) to 3 months (90 days).

Additionally, the following provisions must be adhered to:

  1. work as agreed upon in the contract must be performed during the notice period
  2. the worker is entitled to his full wage as per the contract, for the notice period
  3. the party who fails to serve the notice period must pay the other a ‘notice period’ allowance, which is equal to the worker’s wage for the full notice period or in proportion to the remaining period. The allowance for the notice period is calculated according to the last wage received by the worker.
  4. In the event that the employer terminates the contract, the worker is entitled to an unpaid leave of one day per week during the notice period to search for another job.

 

Note that the notice period may be reduced or exempted on mutual agreement between the two parties, with no infringement of any parties’ rights.

Termination of contract without notice by the employer

Article 44 of the UAE Labour Law mentions that an employer may terminate the services of the employee without notice, if the latter:

  1. adopts a false identity or submits forged documents or certificates
  2. commits an error causing substantial material loss to the employer or if he deliberately damages the properties of the employer and acknowledged the same. Note that the employer must inform MoHRE about the incident within seven working days from having knowledge of the same.
  3. violates instructions concerning safety of the workers and the place of business provided that such instructions were displayed in writing at conspicuous places or verbally informed to an illiterate employee
  4. fails to perform his basic duties under the employment contract and persists in violating them despite warning him twice of dismissal, if the same is repeated
  5. divulges any secrets of the establishment resulting in losses or a missed opportunity to the employer, or achieving a personal benefit for self
  6. is found to be drunk or under the influence of prohibited drugs during working hours, or commits an action breaching the public morals at the workplace
  7. assaults the employer, the manager or any of his colleagues during the course of his work
  8. absents himself without lawful excuse for more than 20 intermittent days or more than 7 successive days during one year
  9. exploits his position illegally to obtain personal results and gains
  10. joins another establishment without abiding by the rules and procedures in this regard.

Note

The law stipulates that the employer may terminate without notice only after conducting a written investigation of the worker. The dismissal notice must be in writing, justified and handed over duly to the employee.

Termination of contract without notice by the employee

Article 45 mentions that an employee may terminate the contract without notice, if the employer:

  1. fails to meet his contractual or legal obligations towards the worker, provided that the worker notifies the MoHRE 14 working days before the date of quitting and the employer fails to rectify the breach despite being notified by MoHRE of the same
  2. assaulted or harassed the worker at workplace, provided that the latter informs the competent authorities and the MoHRE within five working days from the date on which he was able to report
  3. instructed the worker to perform a work fundamentally different from the work agreed upon in the employment contract, without the worker’s written consent on the same, except for situations where work is absolutely required and as explained in Article 12 of the UAE Labour Law
  4. failed to remove the factors that pose a grave danger and/or threaten the workers’ safety or health despite being aware of it. Article 26 of Cabinet Resolution No. 1 of 2022 on the Implementation Regulation of Federal Decree Law No. 33 of 2021 spells out circumstances of grave danger at the workplace.

Arbitrary dismissal

Article 47 says that if the employer terminates the employee for: filing a complaint to MoHRE or filing a lawsuit against the employer, whose validity is proven, then such termination is illegal.

 

If an employee believes that he has been dismissed illegally, he can complain to Ministry of Human Resources and Emiratisation. The ministry will try to solve the issue amicably. If an amicable settlement is not reached, the case will be referred to the respective court.

 

 If arbitrary dismissal is proven, the court will order the employer to pay a compensation to the employee. The court will assess the value of compensation taking into account the type of work, the extent of damage caused to the employee and the duration of his employment. In all cases, the amount of compensation must not exceed the wage of the employee for a period of three months, calculated on the basis of the last wage he was entitled to.

 

In addition to compensation, the employee can claim his gratuity, notice period dues or any other unpaid dues he is entitled to, from his employer.

Changing jobs or working for another employer after termination of contract

After termination or expiry of the contract, you will get a grace period from the date of cancellation, in which you can either obtain a new work permit (PDF, 500 KB) and residency or leave the country. Illegal residents are liable to be fined/deported.

Please refer to Ministry of Human Resources and Emiratisation (MoHRE) and Federal Authority for Identity, Citizenship, Customs & Ports Security (ICP) for information and services regarding grace periods, new work permits and residency.

 

Meanwhile, Article 8 of the Ministerial Resolution No. 47 of 2022 Regarding the Settlement of Labour Disputes and Complaints Procedures (PDF, 292 KB) mentions that an employee may not get a work permit for one year from the date of his/her departure from the UAE if:

  • he/she terminates the employment contract during his/her probation period, provided that the employer had not breached his/her contractual obligations or if
  • a ‘work abandonment’ report against him/her was found to be true.
Updated On :

29 Oct 2024

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