The UAE government works tirelessly to ensure fair working conditions for everyone. They regularly revise policies and frameworks and keep employers and employees under strict scrutiny for their conduct.
The government lays down that either party can terminate an employment contract given that they serve notice and comply with other legal consequences that arise from termination. Today, we will be shedding light on the following:
- When can termination happen
- What happens if the contract is terminated without notice
- What is arbitrary dismissal
- Opportunities for changing jobs after termination
Straight to the point now.
When Can Termination Happen
The first question to arise is under which circumstances can the employer or the employee terminate the employment contract.
Article 42 of the UAE Labor Law, otherwise titled the ‘Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector,’ allows for termination on the following nine grounds:
- The employment contract has expired and has not been renewed or extended.
- On mutual account
- If either party wishes to terminate it, the terminating party follows the provisions for termination mentioned in the contract and the notice period mentioned in it.
- If the employer is dead (on the account that the contract’s subject is related to the entity)
- On account of an employee’s death or permanent inability to work, proven by a medical certificate issued by a medical entity
- If the worker is facing a freedom-restricting penalty resulting from the court’s final judgments for three months or more.
- The establishment closed permanently in accordance with the UAE legislation.
- The project cannot be continued in the event of the employer’s bankruptcy, insolvency, or economic or exceptional reasons.
- The worker is unable to fulfill the requirements for renewing the work permit for reasons beyond the employer’s control.
What the Law Has to Say About Notice Period
Article 43 also provides information on the notice period and process of termination. According to the article, either party can terminate the employment contract for a legitimate reason. In order to terminate, they:
- Must give a written notice to the other party
- Serve a notice period of 1 month to 3 months, as mentioned in the employment contract.
Some of the other aspects that need to be followed are:
- Both parties should perform the work as outlined in the employment contract during the notice period.
- The worker will receive full pay during the period.
- In case a party fails to serve the notice period, they will have to pay a ‘notice period allowance’ to the other party. This allowance is equal to the worker’s wage for the notice period or in proportion to the remaining period. It is calculated based on the last drawn wage.
- If the employer terminates the contract, the worker is allowed one day of unpaid leave per week to search for another job.
What Happens If The Contract Is Terminated Without Notice
In some instances, you may want to terminate the contract without notice. The UAE government recognizes it and allows it to. However, for either party to terminate the contract without notice, there are some grounds to be met. Take a look below.
For Employers
Article 44 allows employers to terminate the employee’s contract without notice in case of:
- False identity
- Submission of forged documents and certificates
- Causing an error leading to substantial loss
- Deliberate attempt to damage the employer’s property and acknowledge it. In this case, the employer has to report the incident to MOHRE within seven working days from the date of knowing about it.
- Violation of safety instructions (provided that these instructions were made clear to the employee either via writing or verbally informed to an illiterate employee)
- Failure to perform basic duties as per contract and violation of duties after two warnings of dismissal
- Divulging secrets which led to losses, missed opportunities, or personal benefit.
- Found drunk or under the influence of a prohibited substance
- Engaged in an act that breaches public morals
- Assaults anyone at the workplace
- Absenteeism without lawful excuse for 20+ intermittent days or 7+ successive days in a year
- Exploits their position for personal gains
- Joins another organization without following the regulations laid down in this regard
The employer has to conduct a written investigation of the worker. Only after completing this process can the employer lawfully terminate the contract without notice. Additionally, the dismissal notice has to be written, justified, and duly handed to the employee.
For Employees
Similarly, Article 45 allows employees to terminate without notice on predetermined grounds. There are:
- Employers fail to meet contractual or legal obligations. In this case, the employee has to notify the MOHRE 14 days in advance from the date of quitting. If the employer fails to rectify the breach despite MOHRE’s notice, the employee can be terminated.
- Employees experience assault or harassment. Again, the employee has to inform a competent authority and MOHRE within 5 days of the date of the report.
- Instructed the worker to perform tasks not specific in the contract without the worker’s written consent. This ground does not apply to situations where the task is fundamentally required.
- The employer has failed to remove factors that threaten the employee’s safety and health despite being aware of them.
What Is Arbitrary Dismissal
In some cases, the employers may also terminate employees for filing a complaint to the MOHRE or a lawsuit against them. In such cases, if the validity of the complaint is established, the termination is illegal as per Article 47 of the labor law.
Moreover, if the employees feel that they have been dismissed illegally, they can file a complaint to the MOHRE. The MOHRE will then try to solve the matter amicably. If there is no conclusion, they will refer it to a competent court. In such cases, if the arbitrary dismissal, meaning termination without a valid reason, is established, the court orders the employer to compensate the employee.
The compensation is determined after factoring in multiple elements like:
- Type of work
- Extent of damage
- Employment duration
Regardless of this, the compensation cannot exceed the employee’s total wage for 3 months. Additionally, the employee can claim gratuity benefits, notice period dues, or any other unpaid dues for which they are eligible.
Opportunities For Changing Jobs After Termination
The contract was terminated. The pending process was completed. Dues were paid off. What’s next? Another role, maybe. Here’s what the law has to say.
Article 27 states that you are free to work for another employer or get a new work permit after the termination of the contract or expiry and non-extension of the employer contract if:
- Your contract has expired and is not renewed
- The termination has taken place as per Articles 42 and 45 of the UAE Labor Law
If the contract gets terminated or expires, you get a grace period after cancellation, during which you can either:
- Obtain a new work permit and residency
- Leave the country
The UAE is very strict with its laws for illegal residents.
However, you may not be eligible for a new work permit for one year from your departure date under Article 8 of Ministerial Resolution No. 47 of 2022 Regarding the Settlement of Labour Disputes and Complaints Procedures. There are two conditions for this:
- Employee terminated the contract during the probation period, and the employer has not breached their contractual obligation.
OR
- The ‘work abandonment’ report against the employee was found true.
Conclusion
There’s all you need to know about termination of employment in the UAE. The laws are clear, straightforward, and easy to understand. As long as you are operating within them, there should be no consequences.
HRSG supports organizations with workforce administration, payroll & compliance services, attendance & leave management, benefits administration, travel & expense management, and other tasks. We ensure complete alignment between employers and employees to avoid any miscommunication and misunderstanding, which may lead to penalties or legal consequences.
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