Legal View: All you need to know about resigning without serving notice period in UAE

Dubai - Know your rights: Will there be a labour ban? Do you have to pay compensation?

Question. I am on a limited term renewed contract working as a teacher at a private institution in Dubai. As per terms of the contract, I am required to serve a three-month notice period if I am to resign.

1. If I do not complete the three-month notice period after I tender my resignation, what are the consequences? Will there be a labour ban?

2. If I don’t serve my notice period, will I still get gratuity for the years I served?

3. Is there a penalty for not serving the notice period? How is it calculated?

4. Can I use my existing annual leave (unused ones) to compensate for my notice period?

Answer: Pursuant to your queries, we assume that you are employed in a private educational institution based in mainland Dubai. Therefore, the provisions of Federal Law No. (8) of 1980 regulating employment relations in the UAE (the ‘Employment Law’) and the provisions of Ministerial Decree No. (766) of 2015 on rules and conditions for granting a permit to an employee for employment by a new employer (the ‘Ministerial Decree No. 766 of 2015’) are applicable.

If the employee does not serve the stipulated notice period mentioned in the employment contract, he or she has to compensate the employer by paying the amount equivalent to the period for which the notice period is not served.

This is in accordance with Article 119 of the Employment Law, which states: “If the employer or the employee has failed to serve notice to the other party for termination of the contract or has reduced the notice period, the party obliged to serve the notice shall pay to the other party an indemnity called ‘Compensation in lieu of notice’. It is incurred by the other party as a result of failure to give notice or for reduction of said period, and the indemnity shall be equal to the employee’s pay for the notice period in full or in proportion to the diminished part.

“In regard to employees on monthly, weekly, daily or per-hour work pay, the notice allowance shall be computed on the basis of last pay earned by them. With regard to employees paid on piece work basis, allowance shall be calculated on the basis of the average daily pay provided for in Article 57 hereof.”

Employment ban

However, an employment ban may not be imposed on you if you serve three months of notice period to your employer when you resign or if you pay compensation in lieu of notice to your employer in case you do not serve the stipulated notice period. This is in accordance with Article 1 (I) (4) of the Ministerial Decree No. 766 of 2015, which states: “Either party acts unilaterally to terminate the employment relation following its renewal (irrespective of the period the employee has been in the employment of the employer and irrespective of the date of renewal) provided that:

“a. The terminating party notifies the other party in writing of his/her intent to terminate the contract in accordance with the notice period that was agreed to by the two parties, not to be less than one month and not to exceed three months. If renewal of the contract occurs prior to this decree entering into effect, and the two parties had not agreed to a notice period, then the notice period shall be three months.

“b. The terminating party continues to honor the contractual obligations for the duration of the notice period.

“c. The terminating party indemnifies the other party in the amount that was agreed to by the two parties, not to exceed the equivalent of three months of gross wages; if renewal of the contract occurs prior to this decree entering into effect, and the two parties had not agreed to the amount of indemnification ... Indemnification is set at the equivalent of three months of gross salary.”

Gratuity

Further, as you are on a limited term of employment contract, you may not be entitled to gratuity from your employer in the event you resign before the end of the current employment contract as you have not completed continuous five years of service. This is in accordance with Article 138 of the Employment Law, which states, “If an employee under a contract with limited period leaves his work at his own option before the end of the contract period, he shall not be entitled to end of service gratuity unless the period of his continuous service exceeds five years.”