How does the process of terminating employment contracts work in the UAE?

There are two types of contracts in the UAE: limited and unlimited. And each of them has a set number of steps for their termination, again depending on if it is resignation, arbitrary dismissal or the end of a contract.

A limited contract cannot exceed two years' term and it must mention the notice period ranging from a minimum of one month to a maximum of three months.

Either party can singly terminate the original contract or a renewed contract provided he complies with the legal consequences of early termination which include:

A limited contract can be terminated on the following basis:

In case of unlimited contracts, an employment relation is terminated in one of the following instances:

An employment contract, whether limited or unlimited can be terminated without notice period by either party in accordance of the UAE Labour Law.

An employer can terminate an employment contract without notice and deprive the employee of his end of service gratuity, if the latter:

An employee can terminate an employment contract without notice period if:

Arbitrary or unfair dismissal takes place when an employer terminates an employee or forces him to resign without any justifiable reasons.

According to Article 122 of the UAE Labour Law, arbitrary termination of an employee happens when an employee is fired for reasons not related to work performance, or when the employee files a valid complaint against an employer, which made the latter terminate him maliciously.

(Article 122 - The termination of the employment of the worker by the employer shall be deemed arbitrary should the cause of termination not be related to the work , in particular should the termination of the employment of the worker be made by reason of the filing by the latter of a serious complaint before the pertinent authorities or a valid claim against the employer.)

Article 120 of the UAE Labour lays out the reasons for which termination without notice is lawful.

They are that the employer may dismiss the worker without prior notice in any of the following cases:

a - Should the worker assume false identity or nationality, or submits false certificates or documents.

b - Should the worker be appointed under probation, and the dismissal occur during or at the end of the probation period.

c - Should the worker commit an error resulting in colossal material losses to the employer, provided that the Labour Department is notified of the incident within 48 hours of the knowledge of the occurrence thereof.

d - Should the worker violate the instructions related to the safety at work or in the work place, provided that such instructions be written and posted in a prominent location, and that he is notified thereof should he be illiterate.

e - Should the worker fail to perform his main duties in accordance with the employment contract, and fail to remedy such failure despite a written investigation on the matter and a warning that he will be dismissed in case of recidivism.

f - Should he divulge any of the secret of the establishment where he works.

g - Should he be convicted in a final manner by the competent court in a crime of honour, honesty or public ethics.

h - Should he be found in a state of drunkenness or under the influence of a narcotic during work hours.

i - Should he assault during the work the employer, responsible manager or co-worker.

j - Should he be absent without valid cause for more than twenty non-consecutive days in one year, or for more than seven consecutive days.

If an employee believes that he has been dismissed illegally, he can complain to Ministry of Human Resources and Emiratisation (MoHRE). The ministry will try to solve the issue amicably. If an amicable settlement is not reached, the case will be referred to the respective court.

As per Article 123 of the UAE Labour Law, if arbitrary dismissal is proven, the court will order the employer to pay a compensation to the employee.

(Article 123 - As amended by Federal Law no. 12 dated 29/10/1986:

a - Should the worker be arbitrarily dismissed, the competent court may order the employer to pay a compensation to the worker. The court shall assess such compensation, taking into account the type of work and the extent of damage incurred to the worker as well as the duration of employment and after the investigation of the work conditions. In all cases , the amount of compensation shall not exceed the wage of the worker for a period of three months calculated on the basis of the last due wage.

b - The provisions of the preceding paragraph shall not breach the right of the worker to the gratuity entitled thereto and the compensation in lieu of notice provided for herein.

The court will assess the value of compensation taking into account the type of work, the extent of damage incurred to the employee and the duration of the employment. In all cases, the amount of compensation must not exceed the wage of the employee for a period of three months, calculated on the basis of the last wage the worker is entitled to.

In addition to compensation, the employee can claim his gratuity, notice period dues or any other unpaid dues he is entitled to from his employer.)

After termination of employment contract and cancellation of work visa, the terminated employee is granted a 30-day grace period from the date of cancellation, where he can either obtain a new residence permit or leave the country. Illegal residents are liable to be fined/deported.