UAE jobs: 10 legal ways of terminating employment contracts

Explained: Circumstances under which dismissals may be considered arbitrary

Ismail Sebugwaawo

Published: Mon 17 Oct 2022, 1:37 PM

Last updated: Mon 17 Oct 2022, 3:29 PM

The UAE legislators stipulated some rules to regulate and arrange the matter of termination of employment contract whether it happened by the employer or the employee. This is to ensure that it is lawful if it happened in specific circumstances or it will be considered as arbitrary dismissal.

Under UAE’s new labour law, either party can terminate an employment contract provided he/she serves notice period and complies with the other legal consequences of the termination, according to the UAE Digital Government website.

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It would be considered arbitrary dismissal if the employer terminates an employee because the latter filed a legitimate complaint with the Ministry of Human Resources and Emiratisation (MoHRE) or a lawsuit against the employer.

The 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 the contract.

3-If either party wishes to end the contract, 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

9-If the employer becomes bankrupt or insolvent, or faces any economic or exceptional reasons that prevent the continuation of the project.

10-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.

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.

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

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