The United Arab Emirates (UAE) being a paradise for job seekers from all over the world, have specific laws and regulations governing the termination of labour contracts to ensure fair treatment and protect the rights of both employer and employees to balancing their interests.
Employment Contract is the foundation of employer-employee relationship enumerating the terms and conditions of employment. There are circumstances where termination becomes a necessity which would result in affecting either party’s interests and ultimately, the Court’s interference would be required to resolve such disputes.
It is important to note that while arbitration is a recognized method of dispute resolution in the UAE, it is typically used for resolving disputes arising from contractual matters. Employment-related disputes are usually handled through the Ministry of Human Resources and Emiratisation (MoHRE) or the relevant labor department, rather than through arbitration.
Grounds for Termination of Employment Contracts
As per the Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, the ‘UAE Labour Law’, the employment contract can be terminated by the employer in the following situations;
Notice period of Termination
Article 43 of the UAE Labour law provides that either party in the employment contract can terminate the contract for any ‘legitimate reason’, provided that a written notification is given to the other party and the terminating party serves a notice of 1 month (30 days) to 3 months (90 days). However, the notice period may be reduced or waived as per mutual agreement between the employee and the employer.
Additionally, the following provisions must be adhered to:
As per the UAE laws, the employee is eligible for an unpaid leave of one day per week during the notice period to search for another job in case of termination of the employment contract by the employer.
Termination of contract without notice by the employer and arbitrary dismissal
Article 44 of the UAE Labour Law mentions that an employer may terminate the services of the employee without notice, on the following grounds;
As per the UAE Labour Law, any dismissal or termination of contract by the employee without providing a notice shall be treated as arbitrary dismissal, for which, the employee is eligible for a compensation.
The Law further mandates that termination of contract without notice shall be only after conducting a written investigation. Further, the termination shall be in writing, justified and handed over duly to the employee.
Termination of contract without notice by the employee
According to Article 45 of the UAE Labour Law, an employee can terminate the contract without notice under the following circumstances;
According to Article 47 of UAE Labour Law, if the employer terminates the employee for filing a complaint to MoHRE or filing a lawsuit against the employer, whose validity is proven, then such termination is illegal.
Further, if an employee believes that he has been dismissed illegally, he can complain to MoHRE. The ministry will try to solve the issue amicably. If an amicable settlement is not reached, the case will be referred to the court having competent jurisdiction.
On successfully proving the claim of arbitrary dismissal before the Court with support of sufficient documentary evidence, the court will order the employer to pay a compensation to the employee after considering the value of compensation taking into account the type of work, the extent of damage caused to the employee and the duration of his 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 he was 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.
If you are facing a specific situation or need guidance regarding your employment in the UAE, it is recommended to consult with a legal professional who specializes in UAE labor law to ensure you receive accurate and up-to-date advice based on your circumstances.
Our team of lawyers at Legis Vista are well versed in dealing with labour matters providing consultation where we will analyse the case and provide advice on the suitable remedy available to you under the Law. While providing our services, we are committed to provide effective solutions to your ultimate goals.