Overview of the labour law applicable in the UAE

The United Arab Emirates (UAE) stands as a shining beacon of economic prosperity in the Middle East. In the dynamic landscape of employment, where opportunities abound and talent flows, understanding the termination of employment in UAE becomes essential. However, to ensure that employment remains just and equitable for all, the UAE has crafted a comprehensive labour law framework.

In this comprehensive article, we will navigate through the multifaceted landscape of employment termination. Also, we will shed light on the recent transformations brought about by the UAE’s commitment to modernizing its labour laws. Whether you are an employer or an employee, this article will equip you with the knowledge you need to navigate the UAE Labour Law Termination with confidence.

Termination of Employment in the UAE

The termination of employment contracts in the United Arab Emirates (UAE) is a critical aspect of the country’s labour landscape, governed by the comprehensive UAE labour law. This legal framework ensures that both employers and employees experience fair and just treatment throughout the employment relationship. Understanding the intricacies of termination of employment in UAE is essential for all parties involved.

UAE Labour Law Termination is a multifaceted process with various aspects and considerations. It encompasses matters related to notice periods, benefits, and the legal grounds for ending employment contracts.

In recent years, the UAE labour law had a notable development: The transition from permanent employment contracts to fixed-term contracts. This has implications for termination benefits. Employees with fixed-term contracts receive specific benefits upon contract completion; for instance, end-of-service gratuity, calculated based on their duration of employment.

Termination law in the UAE, often referred to as contract termination, prescribes strict guidelines for employers and employees alike. Employers must adhere to these guidelines when terminating employees’ contracts to ensure that they comply with the law.

Termination of limited contracts is another facet of UAE labour law. Limited contracts have predefined durations, and the termination process for such contracts is distinct from that of indefinite-term contracts. Limited contract employees may receive compensation for unexpired contract duration upon early termination.

Abolition of Permanent Employment Contracts in the UAE

Historically, permanent employment contracts were commonplace in the UAE. These indefinite-term contracts offered employees a sense of security but often limited employers’ flexibility. The UAE has adapted labour laws to meet evolving needs of employers and employees, revamping regulations in recent years.

The transition from permanent to fixed-term contracts is a fundamental aspect of this transformation. The move towards fixed-term contracts, stipulated by termination of employment in UAE, allows for more flexibility in employment relationships. These contracts have specific durations, clearly defined terms, and well-defined processes for termination of limited contracts.

This shift in employment contracts also impacts termination benefits. Employees with permanent contracts have specific benefits entitled to them upon termination. However, with the abolishment of permanent contracts, these benefits have evolved. Employees on fixed-term contracts now receive end-of-service gratuity. This is a crucial aspect of contract termination under UAE law, calculated according to their employment duration.

Furthermore, the concept of contract termination in the UAE has undergone a transformation. Employers must now adhere to the new regulations regarding termination procedures, including the notice period in UAE. This guarantees fair and equitable treatment for both employers and employees during the termination process.

Termination by Notice

In the United Arab Emirates (UAE), termination by notice is a fundamental aspect of the country’s labour law framework. This procedure establishes a structured and equitable process for concluding employment contracts. Indeed, safeguarding the rights and interests of both employers and employees, in accordance with termination of employment in UAE regulations.

Under UAE labour law, the notice period in UAE plays a pivotal role in the termination process. A notice period, which usually comes with a termination letter, serves as a formal communication between employer and employee; it serves to indicate the intention to terminate the employment relationship. The duration of the notice period varies depending on the nature of the contract and the reason for termination.

In indefinite-term contracts, both employers and employees are usually obligated to give notice as specified in their employment agreement. This period can range from 30 to 90 days, allowing both parties ample time to prepare for the impending termination. This ensures a smooth transition and minimizes disruptions in the workplace.

Fixed-term contracts also adhere to specific notice periods outlined in the contract. Fixed-term contract terminations typically align with the predetermined end date, with notice, known by both parties.

Understanding the nuances of termination of contract of employment and the associated notice period is essential to avoid disputes and potential legal ramifications. Both employers and employees in the UAE must follow termination procedures as per the law for fairness and justice.

Can employer terminate employee without notice in UAE?

Termination without notice by the employer is a sensitive and significant matter in UAE labour law’s intricate landscape. This procedure involves the employer ending an employment relationship abruptly and without the customary notice period. Nevertheless, such action is subject to stringent regulations outlined in termination law in UAE.

UAE law allows employers to terminate contracts without notice in certain defined situations under the legal framework. These situations typically revolve around serious misconduct, repeated violations of company policies, or any actions that harm the employer’s interests. However, it is essential to note that the UAE labour law requires employers to provide substantial evidence supporting such terminations.

Deciding to proceed with termination of a contract in the UAE without notice should not be made lightly. Employers must adhere to the principles of fairness and due process, ensuring that the termination is justifiable and legally sound. Failure to do so may lead to legal challenges and potential penalties.

Employees have rights and entitlements under UAE labour law when their employment contract is terminated by the employer without notice. Despite the sudden termination, employees are still entitled to termination of employment in UAE benefits; for instance, their end-of-service gratuity, calculated based on their length of service.

Termination of Contract Without Notice by the Employee

In the realm of termination of employment in UAE, it is not only employers who possess the right to terminate contracts; employees can terminate contracts without notice in specific circumstances outlined in UAE termination law

Of course, an employee’s right to terminate contracts without notice is a crucial aspect of the UAE labour landscape. Employees may opt for this if their employer breaches the employment agreement’s terms and conditions. Such breaches may include non-payment of wages, unsafe working conditions, or other serious violations of the employment contract.

Employees considering this action must be aware of their rights and the UAE contract termination procedures. The UAE labour law protects employees, preventing vulnerability when they initiate contract termination. When terminating an employment contract without notice, employees are still entitled to their termination of employment in UAE benefits. These benefits are a vital part of UAE labour law and are calculated according to the employee’s tenure.

Modernization of Labour Law in the UAE

The United Arab Emirates (UAE) has been at the forefront of modernizing its labour laws to adapt to the evolving employment landscape. This progressive approach to labour regulation reflects the country’s commitment to fostering a fair and equitable environment for employers and employees, particularly concerning termination of employment in UAE.

One of the most significant changes in the modernization of labour law in the UAE is the shift away from permanent employment contracts to fixed-term contracts. This shift has far-reaching implications for various aspects of the employment relationship. Including termination of limited contracts and the associated UAE labour law termination benefits.

What is the termination law in UAE 2023?

The new UAE Labour Law, also known as Federal Law No. 8 of 1980, as amended by Federal Law No. 12 of 2020, will come into effect on 1 January 2021. This law is applicable to all employers, employees and workers in the UAE, and replaces the termination provisions of the UAE Labour Law.

The termination law in UAE 2023 states that employees can be terminated for any of the following reasons:

1. Gross negligence or dishonesty
2. Serious misconduct
3. Violation of the UAE’s laws or regulations
4. Inability to perform their work due to physical or mental illness
5. Termination due to redundancy or overstaffing
6. Non-renewal of the contract after the expiration of its term
7. Unsatisfactory performance, provided that the employee has been given notice and an opportunity to improve
8. Unauthorized absence from work for more than 20 consecutive days
9. Termination upon the expiry of a fixed-term contract

The law also states that if an employee is terminated for any of the above reasons, the employer must provide the employee with at least 30 days’ notice, or pay the employee a salary in lieu of notice. In addition, the employer must also provide the employee with any applicable compensation or end-of-service benefits.

The new UAE Labour Law is set to be amended in 2023, and the revised termination provisions are expected to be outlined when the amendments are introduced.

What are the benefits of termination in UAE?

If the company terminates an employee in UAE benefits are:

• Severance Pay: Employees are typically entitled to 1-3 months of salary for each year of service.
• End of Service Gratuity: Employees are typically entitled to 21 days of pay for each year of service.
• Notice: Employees are typically entitled to at least 30 days of notice before their termination takes effect.
• Medical Insurance: Employees are typically entitled to continued medical coverage during the notice period, as long as they have been with the company for at least 12 months.
• Airfare: Employees are typically entitled to reimbursement of their airfare home in the event of termination.
• Vacation Pay: Employees are typically entitled to an additional payment for any accrued and unused vacation time.
• Relocation Assistance: Employees may also be entitled to receive assistance with relocation costs in the event of their termination.

What is the difference between termination and resignation in UAE?

In the UAE, termination is when an employer ends an employee’s contract against their will. This could be due to poor performance, misconduct, layoffs, or any other reason. Termination can be either immediate or with a notice period.

Resignation is when an employee voluntarily ends their contract. The employee must provide notice to the employer according to the terms of their contract, and the employer must accept the resignation. The employee is then released from their duties.

What is the compensation for termination of employment UAE?

The compensation for termination of employment in the United Arab Emirates is governed by the UAE Labor Law, which states that:

• An employee who has completed one year of service or more is entitled to either a payment of their gratuity or a sum of money in lieu of gratuity.
• The gratuity is calculated based on the employee’s last salary and the number of years they have worked for the employer.
• The gratuity payment is capped at two years’ salary.
• Additionally, the employee is entitled to a payment of their unpaid wages at the time of termination and any other benefits or allowances that are due to them.

Termination of Fixed-Term Contracts in the UAE

In the landscape of termination of employment in UAE, understanding the termination of fixed-term contracts is essential for employers and employees alike. Fixed-term contracts have become the standard employment arrangement in the United Arab Emirates (UAE). Bringing with them specific regulations and nuances in termination law in UAE.

Fixed-term contracts are defined by pre-established durations, clearly indicating the commencement and conclusion dates of employment. These contracts have been a pivotal part of the modernization of labour law in the UAE. Consequently, the termination of fixed-term contracts is subject to distinct rules and procedures.

The termination process for fixed-term contracts typically differs from that of indefinite-term contracts. In most cases, fixed-term contracts end upon the contract’s natural expiration, without requiring notice or specific reasons for termination. This aligns with the contractual agreement and provides both parties with clarity regarding the employment’s duration.

However, it is crucial to note that there can be exceptions. If either the employer or the employee wishes to terminate the fixed-term contract before its scheduled end date, they must adhere to the termination provisions outlined in the employment agreement. This may involve providing notice or fulfilling any other contractual requirements.

If considering the termination of a limited contract before its scheduled end, seeking legal counsel is advisable to ensure adherence to termination of employment in UAE regulations. Failure to do so may result in legal disputes or financial implications.

Despite the structured nature of fixed-term contracts, employees are still eligible for their termination of employment in UAE benefits, which encompass end-of-service gratuity. This benefit is computed based on the employee’s length of service, even if their contract has a fixed duration.

Arbitrary Dismissal

In the United Arab Emirates (UAE), arbitrary dismissal, often referred to as wrongful termination, is a critical concept within the realm of termination of employment in UAE. This legal term pertains to the termination of an employee’s contract without valid or justifiable reasons, a practice strictly prohibited under the UAE labour law framework.

The UAE places a strong emphasis on protecting the rights and interests of both employers and employees, and arbitrary dismissal contravenes this principle. Employers are required to provide sound justifications for any termination of contract UAE, whether the contract is indefinite or fixed-term, in accordance with termination law in UAE.

Valid reasons for termination typically include employee misconduct, repeated violations of company policies, or actions that significantly harm the employer’s interests. It is essential for employers to have concrete evidence supporting their decision to terminate an employee’s contract.

Failing to adhere to the legal provisions concerning termination of contract under UAE law can result in serious repercussions for employers. Employees who are wrongfully terminated have the right to seek compensation and may take legal action to safeguard their rights. UAE labour law guarantees that employees are protected from arbitrary actions by their employers, preventing them from being vulnerable.

Arbitrary dismissal underscores the importance of legal compliance in the termination process. Employers must navigate the termination procedures outlined in notice period in UAE. Plus, the specifics of termination of employment in UAE benefits carefully to avoid legal disputes and financial liabilities.

Conclusion

In conclusion, the termination of employment contracts under the labour law framework in the UAE is a multifaceted process with various dimensions and considerations. A comprehensive legal framework governs this process, emphasizing fairness, justice, and the protection of both employers and employees.

The UAE has undergone significant modernization in its labour laws, transitioning from permanent to fixed-term contracts and adapting to international labour standards. These changes have reshaped the landscape of termination of employment in UAE, impacting various aspects such as notice periods, benefits, and the grounds for termination.

Understanding the legal procedures and complying with the regulations outlined in UAE termination law is crucial, whether it involves the termination of limited contracts or indefinite-term contracts. This ensures fair treatment for both employers and employees throughout the termination process.

Moreover, arbitrary dismissal, a practice strictly prohibited under UAE labour law, underscores the importance of justifiable reasons for termination, protecting employees from unjust actions by employers.

In conclusion, the termination of employment in UAE process safeguards the rights and interests of both employers and employees in a structured manner. Adhering to these regulations ensures a fair and transparent working environment for all parties involved.

If you have any questions or need further information about UAE labour law termination, please do not hesitate to contact Connect HR at +971 43 316 688 or via email at [email protected]. Our representatives are available to answer your inquiries and provide the guidance you need.