Unsure about what the UAE law has defined about employee termination? This blog post has everything that you need to know!
Understanding UAE employee termination laws demands clarity, confidence, and compliance. A single misstep can lead to legal complications. Be very careful to stay away from strained workplace morale or costly penalties.
Recent law updates have mandated termination to process with notice or without a notice period. Employers have the right to terminate an employee without a notice period according to Article 44 of the UAE labor law. It usually occurs when an employee does something serious that harms the company. Termination also happens with a clear notice period, allowing 30 to 90 days. Gives both parties ample time to plan and execute their pending duties.
Want to know more? This guide is written to put essential knowledge at your fingertips. We break down the UAE’s termination laws into clear, practical steps. We combine clarity with depth. Highlighting how to seamlessly pass probation notices, instant‑dismissal rules, and end‑of‑service pay without drowning in legal jargon.
From business owners to HR and legal departments, this blog is a complete guide to understanding employee termination under UAE law.
Overview of UAE Labor Law for Termination
In the UAE, ending a job follows rules set by Federal Decree-Law No. 33 of 2021. These rules help employers and employees understand their rights and duties. A job can end if both sides agree. Allowed by the law, when the contract finishes, or for clear reasons.
Types of Employment Contracts:
Employment contracts in the UAE can be of two types. Including limited contracts or unlimited contracts. These contracts explain the job terms and affect how the job can end. Limited contracts end on a set date unless both sides agree to extend them. Usually lasts 1 to three years and can be renewed on mutual understanding. Unlimited contracts have no end date and can be ended by either side with notice.
The UAE free zones follow the same rules of Federal Decree-Law No. 33 of 2021 for job termination. This law covers most private companies, but there are some exceptions. Free zones may also have their own rules that add to or slightly change the federal law.
Valid Grounds for Employee Termination under UAE Law
As an employer, you must know your rights and duties when terminating an employee.
Termination with Notice
A notice period is usually required when ending a job in the UAE. This means the employer or employee must inform the other side in advance. The notice period must be given of 30 to 90 days, depending on the contract. Gives both parties time to plan and complete any final tasks. The person who ends the job may have to pay a fine or face legal issues if no notice is given.
Termination without Notice (Article 44)
Article 44 of the UAE Labor Law allows employers to end a contract without notice. The employers do so if the employee does something very serious. This includes:
- Using a fake name
- Giving false documents
- Causing big losses to the company, or
- Breaking safety rules.
These rules of termination of employees in the UAE help protect companies from major harm caused by employee actions.
Employee Rights Upon Termination
If your employee is facing termination, know that they have certain rights before moving out of their current job. You’re responsible for fulfilling all obligations. Let’s find out what those are.
End of Service Benefits
When employees in the UAE leave a job after working for at least one year, they are entitled to End of Service Benefits. The EOSB is also called gratuity and is based on their basic salary and how long they have worked. Workers get 21 days of basic salary for each year for the first five years. After five years, they get 30 days of basic salary for each extra year. This benefit supports employees when they leave a job or retire.
Other Entitlements
Employees may also get other payments when their job ends. These include paying for unused vacation days. The cost of return travel to their home country, if the company agreed to cover it. In some cases, extra money if they were unfairly fired. The employee could get up to three months’ salary as compensation if the dismissal was wrongful.
Termination Procedures Businesses Must Follow
It is very important to follow the right steps when ending an employee’s job. It ensures fairness and follows the labour law.
- Termination Reason: Mention the valid reason for ending the job in the termination letter. It must follow the legal rules of termination of an employee in the UAE.
- Notice Period: Give the correct notice period mentioned in the contract/law. Unless the employee is being let go for serious misconduct.
- Clearance: The Employee must return company items like laptops, ID cards, or tools.
- Settlement of Dues: Pay any remaining salary, overtime, and other pending payments.
- End of Service Benefits: Calculate and pay the gratuity. Clear out any other benefits the employee has earned.
- Repatriation: Arrange their return flight to their home country if required for foreign employees.
- No Objection Certificate: Consider giving a NOC. It might help the employee get a new job in the UAE.
- Ministry Notification: Inform the Ministry of Human Resources and Emiratisation about the job ending if needed.
- Record Keeping: Keep all documents of termination. This helps if there is any dispute later.
- Handover Process: The employee must hand over their duties to someone else.
- Exit Interview: Talk to the employee before they leave. Get their feedback and understand their experience.
Following these steps keeps things legal. Lead to a respectful and professional departure for both the company and the employee.
Common Mistakes to Avoid in Employee Termination, UAE Law
Ending an employee’s job is a serious step. Try not to make any mistakes. This can lead to legal trouble or damage your company’s reputation. To help you eliminate mistakes, here are some common ones to avoid:
- No Clear Reason:
Terminating someone without a valid and documented reason can lead to legal claims. - Skipping the Notice Period:
Not giving proper notice (or paying in lieu) as per the law or contract is a major error. - Wrongful Termination:
Firing someone unfairly can lead to legal cases. The reasons could be personal bias or without proof of misconduct. - Poor Documentation:
Not keeping records of warnings, performance reviews, or misconduct reports makes it hard to defend your decision. - Ignoring Labour Law Updates:
Laws in the UAE can change from time to time. Not staying updated may result in non-compliance. - Not Settling Final Dues:
Delaying or underpaying final payments, gratuity, or leave balance can bring legal penalties. - Failure to Follow Process:
Skipping proper handover, clearance, or exit procedures creates confusion and future issues. - No Exit Interview:
Missing the chance to learn from the employee’s feedback is a lost opportunity for improvement. - Not Issuing a NOC (When Promised):
If promised, not providing a No Objection Certificate can hurt the employee’s future prospects and cause complaints. - Disrespectful Handling:
Ending a job in a rude or unprofessional way harms morale. It can affect your company’s image.
Companies can handle terminations smoothly by avoiding these mistakes. Direct them to act fairly and within the law.
Legal Consequences of Unlawful Termination
If an employee is unfairly fired without a good reason, it is called an unlawful or arbitrary dismissal in the UAE. The employer may have to pay a fine in such cases. The law allows employers to end jobs. However, if it’s done unfairly, the employee must be paid compensation. This is up to three months’ salary. Plus other payments like notice period pay and end-of-service benefits.
Wrapping Up!
It is vital to understand employee termination laws in the UAE for every business. Each step must be handled with care. Whether it be giving proper notice to settle dues to respecting legal rights. Knowing valid reasons for termination is paramount. Must perform your duties as an employer fairly, including the calculation of end-of-service benefits and avoiding common mistakes like poor documentation or unfair dismissal.
Following the UAE Labor Law helps you avoid legal trouble. It shows respect for your employees. Meanwhile, protecting your company’s reputation and building trust within your team.
Be sure that the process runs smoothly and legally. Need assistance? It’s always a good idea to consult with professionals or legal experts. Hire the services of EOR Middle East to better understand the UAE employee termination laws. Their guidance can help you make the right decisions. Let’s carry out fair, clear, and professional terminations!
FAQs
Can an employee be terminated during probation?
An employee can be terminated during the probation period. Probation is a period when an employer sees if the employee is the right fit for the job. The employer can end the job if the employee is not suitable.
How much notice should be given after termination in the UAE?
An employer can fire an employee for poor performance in the UAE. However, there are rules to follow. The employer must have a valid reason and proof. Including reports or records. The employee should first get warnings and a chance to improve before being terminated.
Can employers terminate for performance issues in the UAE?
In the UAE, the notice period is 30 days when a job ends. It can be longer for up to 90 days. Depends on what’s written in the contract. The employer and employee must follow this notice period unless they both agree to shorten it.
