Termination of Employment in the UAE: A Practical Overview

Getting a fantastic career in Dubai may be the goal for many expatriates who see it as the ideal place to prosper and grow professionally. However, in addition to hunting for jobs, you also need to become familiar with UAE employment laws. Particularly with regard to termination of employment UAE, understanding every aspect is essential.

In this article, we will be talking about termination of employment UAE. You might think that finding out more about Dubai employment termination. However, the reality is that being familiar with this could help you stay out of trouble while residing in the UAE on an employment visa. Let us start with the details!

Termination Grounds and Legal Requirements in the UAE

In the private sector of the UAE, there needs to be a good reason to termination of employment Dubai. Compensation must be in place if an employer lacks of a good excuse.

Short-Term Contract

The contract is automatically ends unless both parties mutually agree, before the end date, to either: 

• Renew the agreement 
• Change it to a limitless duration agreement.

Therefore, notice clauses in a short term contract are uncommon.

If it can be demonstrated that an employee violated one of the grounds outlined in Articles 120 and 88, the employer may terminate the short-term contract prior to its expiration date.

According to Article 121, an employee may legally quit without giving notice if their employer violates their rights under the conditions of their employment contract or if they endure physical abuse by them or a representative of their company.

Limitless Contract

A minimum of a month and a maximum of three months’ notice must be given by the employee to the employer in order to end the working relationship. Additionally, an employee may legally end their job relationship for either of the aforementioned reasons listed in Article 121, without giving prior notice. There are two methods that an employer may legitimately fire an employee according to UAE labor law:

• A worker’s employment may be terminated by their employer with notice in accordance with their agreement for a “valid reason” under Article 117. Although the code does not define the term “valid reason”, any justification must be relevant to one’s job. Such as poor performance or misbehavior.
• According to Articles 88 and 120 of the UAE Labour Law, an employer may dismiss an employee without giving them a reason for doing so if they commit certain acts that constitute gross misconduct.

Termination Notice Periods: Duration and Requirements in the UAE

According to the law related to termination of employment in UAE, there are notice periods for each type of contract:

Limitless contract: Article 117 stipulates that an unlimited contract UAE shall cease with at least a month’s notice. Alternately, the employee may leave their job without giving notice in accordance with Article 121 of the law. If the employer violates their duty to the employee, either the firm itself or the employer’s designated agent is in breach of that obligation.

For any “acceptable reason,” any party can do termination of contract UAE in line with Article 43, provided that: 

• One side gives notice in writing.
• The party exiting the position gives one to three months’ notice.

It is crucial to remember that you can review your formal agreement to see if it specifies the length of the period for notice. You could also negotiate to have it dropped with your employer. As a result, everything is dependent on your individual situation.

Short-term contract: Short-term contract workers must obtain at least a month’s notice. Therefore, if you wish to leave your current job, you must prepare ahead of time. So that you can complete your period of absence and begin working at your new job, give your employer ample time to get ready.

The following essential conditions for the legality of a job contract within the confines of the notice period appear in Article 43 (2) of the UAE labor law termination:

• The contract of employment is still in effect even when the notification time has passed. The employee shall receive remuneration in full for such period. Also, if the Employer requires, provide timekeeping for such period.
• It is only possible to waive or shorten the notice period with everyone’s agreement and while upholding staff members’ rights.

Severance Pay and End-of-Service Benefits in the UAE

Depending on the basis for termination, employees are able to take advantage of the benefits or adhere to certain legal restrictions. Workers who have their termination of employment UAE before the conclusion of their labor agreement have the right to:

• Severance pay: Businesses have a duty to provide end-of-service benefits to employees without delay. This does not include situations where the termination was the consequence of serious wrongdoing. All workers are eligible for termination and gratuity UAE after a year of service.
• Transportation expenses: If you lose your job, the firm is liable for providing for your journey home under Articles 131 and 31 of the employment code.
• Visa grace period: The UAE government provides a one-month grace period after a visa for work expires. A new proposal that would extend the grace interval from 90 to 180 days is beginning to surface. In rare cases, you can also request that your employer delay the cancellation of your residency permit while you find another job. However, your employer will determine whether to permit it or not. You can notify the authorities and file a termination dispute UAE if the employer does not terminate the visa.
• Receivables and dues: The fines and money owed may vary based on how somebody is fired. If you are laid off as a result of budgetary restrictions (redundancy), you only get your gratuity and/or notice-period compensation. Your employer has a responsibility to provide you with a gratuity and other compensation if you are an unfair dismissal.

Redundancy Terminations: Criteria and Considerations for Reducing Workforce

Employers may face significant difficulties and dangers when implementing staff reductions due to concerns about unequal treatment or negative effects on certain employee groups. When planning necessary labor cutbacks, a number of options are possible.

Seniority:

Because seniority-based systems compensate employees for their duration, older workers are less likely to sue their employers for age discrimination. The employer does not benefit from additional risks of potential prejudice towards other protected groups by utilizing seniority, though.  Additionally, utilizing seniority-based selection may force the business to keep on board workers with antiquated skills or those who are less tech aware.

Employee Status:

To assure more stable jobs for the remaining core employees, employers who have freelance or temporary staff on their payrolls may opt to let those employees go first. This approach may not be adequate on its own to meet downsizing objectives. Plus, it may need to go with other selection criteria, unless a company’s staff is predominately working with contingent workers.

Merits:

Despite the fact that this approach of selection is frequently favored by managers due to its increased flexibility for filtering out poorly performing individuals, it should be carefully examined. This method does not provide a precise qualitative mechanism for ranking the differences between individual employees’ performance when selecting employees for layoffs. This because merit selection standards are based either in full or in part on performance statistics. 

Skills:

Employers may occasionally be able to keep those employees who possess the most in-demand abilities thanks to this kind of approach. Be mindful, though, that using this strategy can result in a corporation keeping younger employees with valuable and adaptable skill sets while letting go of older employees who might lack those talents.

Termination Procedures: Steps to Follow for a Proper Employment Termination

Before you terminate someone for insubordination, violating a work rule or another kind of wrongdoing, or for merely performing badly on the job, there are plenty of procedures you need to take. These actions include identifying the issue, following fair norms and procedures, and conducting a comprehensive investigation into the “last straw” occurrence.

The best method to fire someone legally is to make sure you have a good, nondiscriminatory business rationale for doing so. Plus, that you have enough supporting evidence to back up your claim. Before you dismiss the person, you must first generate your paperwork in the usual way of business.

It is crucial to keep in mind that giving your employees ample notice about the behavior and performance you anticipate from them increases the likelihood that they will view a termination as “fair” in the eyes of both your employees and the courts. Additionally, it is critical that employees get regular feedback on how well they doing at work. Plus, receive warnings anytime you discover that they are not meeting standards.

Factors and Formulas for End-of-Service Benefits

Under UAE labor law, figuring out your end-of-service bonus is an easy and straightforward process. Unpaid days of leave should not be taken into account when determining the ultimate gratuity amount. This according to a recent UAE MOHRE statement.

The United Arab Emirates gratuity is a sum of money employees receive upon the termination of employment UAE. What you should know regarding UAE gratuity is as follows:

• Calculation basis: The employee’s basic salary, the set amount of the pay before other benefits are added, is used for figuring how much gratuity is due. The figure excludes expenses for things like accommodation, transportation, utilities, furniture, etc.
• Duration of service: The length of an employee’s employment with a company determines the amount of the gratuity payment. The first 5 years of service go into consideration for resignations and terminations.
• First 5 years: An employee is eligible to earn up to a 21-day wage payout for each of the first 5 years of employment. Meaning that for every service year, you will get a gratuity payout equal to 21 days’ worth your basic income. This, if you quit or are let go during this time.
• After 5 years: A higher gratuity rate is available to workers who have been working for the same employer for over five years in a row. The gratuity amount rises to 30 days’ value of the basic salary for each year after the first five.
• Unpaid leave: A new change states that the total gratuity amount would be less by the number of unpaid leave days an employee takes. Previously, unpaid leave did not get into account; the computation happens using the entire number of years of service.
• Last salary: The employee’s final basic salary, serves to determine the gratuity. It excludes any concessions and other incentives.

Termination Grounds: Redundancy and Restructuring Situations

When an employee is let go due to a decrease in the demand for their position, this is a redundancy dismissal. Redundancy firings are terminations that are never the employee’s responsibility. This, because the choice did not happen due to misconduct or subpar performance. Instead, it is a termination happening by:

• A shift in the demands of the business.
• A relocation of the workplace.
• The total closure of an employer.

Though there is no official definition of redundancy. However, courts have previously recognized that businesses may be able to terminate an employee for cost-saving purposes. This, in accordance with article 117 of the UAE Labor Law.

The components of the redundancy procedure will depend on the specifics of the circumstance. And also, the size of the affected workforce. Generally speaking, a fair and thorough procedure should include a meeting with all workers. As well as one-on-one consultations with each impacted employee. The procedure should give the business and the impacted workers the chance to think about other options besides layoffs.

Additionally, the company should give the employees official letters and updates during the procedure. As well as the necessary documentation pertaining to the redundancies and broader economic condition.

Dismissals due to redundancy can be particularly difficult in the UAE. This, due to the majority of expats’ residency depends on their work and visa sponsorship. Because of this, businesses may want to think about restructuring rather of starting a redundancy process. This would allow them to keep their competent employees while saving money.

Restructuring examples include:

• Changing the responsibilities that individuals play inside the organization.
• Temporarily reducing working hours.
• Temporarily eliminating non-essential perks from employment terms.
• Requesting that employees take time off during slower business periods.

Go to our insights section to learn more about termination of employment UAE.