Termination of Employment Contracts Under the New UAE Labor Law
The UAE introduced the new labour law, “Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relation in the Private Sector” (New Labour Law), replacing the previous Federal Law No. 8 of 1980. The New Labour Law is effective from February 02, 2022, and shall be applicable to all private sector entities in the UAE except for free zone companies registered in the Dubai International Financial Center and the Abu Dhabi Global Market.
Among other changes and amendments, termination of employment contract is a very important factor and following are the condition under which an employment contract can be terminated as per Article 42 of the Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relation in the Private Sector.
- if the term of the contract expires and is not, extended or renewed
- if both, the employer and employee mutually agree in writing to end it
- if either party wishes to end it, provided that the terminating party observes the provisions of termination of the employment contract and the notice period agreed upon
- in the event of the employer’s death if the subject of the contract is related to its entity
- in the event of the worker’s death or full permanent inability to work, based on a certificate issued by a medical entity
- where a worker faces a final court judgement of a freedom-restricting penalty for a period of not less than three months
- if the establishment is closed permanently, in accordance with the legislations in force in the UAE
- if the employer becomes bankrupt or insolvent, or faces any economic or exceptional reasons that prevent the continuation of the project
- if the worker fails to fulfill the conditions for renewing the work permit for any reason beyond the control of the employer.
Article 43 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).
An employer, however, can terminate the employment contract without notice in accordance with Article 44 of Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relation in the Private Sector.
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