Termination and Resignation in the UAE: Understanding Labour Laws

The UAE Labour Law, governed by Federal Decree-Law No. 33 of 2021 (effective February 2022), provides a clear framework for employment termination and resignation. These regulations ensure fairness and transparency for both employers and employees, whether they are terminating a contract or resigning. Understanding the legal provisions is crucial to avoid disputes and ensure compliance with the law.

 

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Termination of Employment in the UAE

Termination refers to the end of an employment contract initiated by either the employer or the employee. The UAE Labour Law outlines specific rules to ensure that termination is conducted lawfully and fairly.

1. Termination by the Employer

An employer can terminate an employment contract under the following circumstances:

1.      Mutual Agreement: Both parties agree to end the contract.

2.      End of Fixed-Term Contract: If the contract is for a fixed term, it automatically ends upon completion unless renewed.

3.      Employee Misconduct: Serious violations such as assault, theft, or repeated negligence can lead to termination without notice.

4.      Redundancy or Economic Reasons: Employers may terminate employees due to restructuring, financial difficulties, or business closure, but they must provide notice and compensation.

Notice Period: For indefinite contracts, employers must provide a minimum of 30 days' written notice (or more, as per the contract). For fixed-term contracts, termination before the end of the term requires mutual agreement or compensation.

End-of-Service Gratuity: Employees who complete at least one year of service are entitled to end-of-service gratuity. The calculation is based on the employee's basic salary:

1.      21 days' salary for each year of service for the first five years.

2.      30 days' salary for each year of service beyond five years.

2. Termination by the Employee

Employees can resign from their jobs, but they must adhere to the terms of their employment contract and the Labour Law:

1.      Notice Period: Employees must provide a minimum of 30 days' written notice for indefinite contracts. For fixed-term contracts, resigning before the end of the term may require compensation unless otherwise agreed.

2.      Valid Reasons for Resignation: Employees can resign without notice if the employer breaches the contract (e.g., non-payment of wages, unsafe working conditions).

 

Resignation in the UAE

Resignation is a voluntary decision by an employee to leave their job. The UAE Labour Law ensures that employees can resign without facing unfair penalties, provided they follow the proper procedures.

Key Points to Consider When Resigning

1. Notice Period: Employees must serve the notice period specified in their contract or the minimum 30 days required by law. Failure to do so may result in financial penalties.
2. Final Settlement: Upon resignation, employees are entitled to their final settlement, which includes:
• Unpaid wages.
• Accrued annual leave.
• End-of-service gratuity (if applicable).
3. Visa Cancellation: Resigning employees must ensure their visa is canceled, and they obtain a clearance certificate from their employer.

Resignation During Probation Period

During the probation period (maximum 6 months), employees can resign but must provide 14 days' notice. If they wish to join another employer in the UAE, they must complete at least 6 months with their current employer or obtain a No Objection Certificate (NOC).

 

Unlawful Termination and Employee Rights

The UAE Labour Law protects employees from arbitrary or unfair dismissal. Termination is considered unlawful if:

1.      It is based on discrimination (e.g., gender, race, religion).

2.      It is in retaliation for filing a complaint against the employer.

3.      It violates the terms of the employment contract.

 

Employees who believe they have been unlawfully terminated can file a complaint with the Ministry of Human Resources and Emiratisation also called (MOHRE) or take the case to the Labour Court.

 

Key Differences Between Termination and Resignation

Aspect	Termination	Resignation
Initiator	Employer	Employee
Notice Period	30 days (minimum)	30 days (minimum)
End-of-Service Benefits	Applicable if not terminated for cause	Applicable if resignation is lawful
Visa Cancellation	Employer's responsibility	Employee must ensure cancellation

 

Practical Tips for Employers and Employees

• For Employers:

o   Always provide written notice of termination.

o   Ensure compliance with the Labour Law to avoid legal disputes.

o   Maintain clear records of employee performance and conduct.

• For Employees:

o   Review your employment contract before resigning.

o   Serve the required notice period to avoid penalties.

o   Seek legal advice if you believe your termination was unfair.

 

Conclusion

Termination and resignation are integral aspects of the employment relationship in the UAE. Both employers and employees must adhere to the provisions of the UAE Labour Law to ensure a smooth and lawful process. By understanding their rights and obligations, parties can avoid disputes and foster a fair and transparent working environment.

For further clarification, individuals are encouraged to consult the Ministry of Human Resources and Emiratisation (MOHRE) or seek legal advice tailored to their specific circumstances.