Procedures For Terminating the Agreement
Article 113 of the UAE Labour Law provides that an employment agreement can be terminated if the two parties agree to cancel it and if the term comes to an end unless explicitly or implicitly extended according to the rules of the law. If the termination by the Agreement is only by one party, there must be a valid reason and the procedures required by the law must be followed.
Instant dismissal by the employer is allowed pursuant to Article 120 of the UAE Labour law which provides that an employer may dismiss an employee immediately without notice in any of the following cases:
- ) If the employee adopts False identity/documents
- ) During Probation period
- ) If the employee commits mistake, loss or gross misconduct (complaint should be made to the Ministry of labour within 48 hours of the employer’s knowledge about the said incident)
- ) Disobedience, safety procedure by the employee
- ) Not doing basic duties and violation despite repeated warnings
- ) Revealing Trade Secrets of the employer
- ) Sentenced by a competent court for an offence involving honour, honesty or public morals
- ) Intoxication by the employee during working hours
- ) If the employee assaults any of his colleagues, worker, employer, manager, supervisor etc
- ) Absence from the work without valid reason for more than 20 non-consecutive days or more than 7 consecutive days.
An Employee may resign and should respect the contract terms and any notice period, otherwise, he will be deemed to have abandoned his work which may result to forfeiture of benefits. The employee may abandon his work if employer fails to honor his obligations under the law and the agreement or if employee is assaulted by the employer or the employer’s legal representative.
Termination On Notice
If the contract is for an unlimited period, the contract will come to an end if the employer or employee terminate the contract for a valid reason by giving other party a minimum of 30 days written notice or more as agreed between the parties pursuant to Article 117 of the UAE Labour Law.
Termination By Reason Of The Employee's Age
An employment contract shall be terminated upon the employee attaining the retirement age. The retirement age for an expatriate working in the private sector is increased from 60 years to 65 years. However, the expatriate employee can work by obtaining a one-year visa after the retirement age provided the service of the said employee is required by the employer subject to the approval of the authority.
Automatic Termination In Cases Of Force Majeure
There is no provision in the UAE Labour law about automatic termination in case of force majeure events.
UAE Labour law does not provide any provision for collective dismissal. They must follow the usual procedures for termination.
Termination By Parties’ Agreement
The employment contract can be terminated by the parties if they agree to end the contract mutually. An employer’s death does not constitute the termination of a labor contract, unless the subject of the contract is related to him personally. The contract will be terminated upon an employee’s total disability (without prejudice to his end of service benefits).
Directors Or Other Senior Officers
There are no special provisions for termination of directors or other senior officers.
Special Rules For Categories Of Employee
There are no special rules for categories of employees other than the employment of young persons and women such as prohibiting young persons from working before reaching 15 years old and women from night working and both from hazardous jobs. Where national employees are not available, preference in employment shall be given to:
- ) Arab workers belonging to an Arab country by nationality
- ) Workers of other nationalities
Whistleblowing is not defined by UAE law and is generally considered as disclosure of the information. Whistleblowing may be considered as a criminal offense under Article 379 of the UAE Penal Code which provides that it is an offence for an individual, who is entrusted with secrets through his employment, subsequently to disclose those secrets.
Specific Rules For Companies in Financial Difficulties
Companies in financial difficulties can restructure the company and can reduce the employment but if the employee claims compensation for arbitrary termination, the employer should prove the court by submitting an audited report that the company is really in financial difficulties. The courts grant a compensation amounting to one to three months salary for arbitrarily dismissed employees.
Special Rules For Garden Leave
There are no special rules for Garden Leave as notice period must be served and cannot be reduced. If the Employer or employee foregoes or reduces the mandated notice period, compensation in lieu of notice, irrespective if whether the other party sustains damages, shall be paid. This is without prejudice to other consequences of not serving notice requirement.
Restricting Future Activities
Non-compete clauses are allowed and recognized with certain limits such as it should be for a reasonable period and defined geographic area and must take into consideration the nature of work of the employee and the requirements of the employer to impose certain restrictions.
According to Article 132 of UAE Labour Law, the Severance pay shall be calculated based on the last basic salary as follows:
- 21 days for each year for the first five years
- 30 days wages for each additional year on condition that the total of the gratuity does not exceed the wages of two years.
- The days of absence from the work without pay shall not be included in calculating the period of service.
- If the Employee under a limited period contract resigns, he is not entitled to end of service gratuity, unless his continuous service exceeds five years.
- If the employment contract of limited period is terminated by the employer for the reason other than those stated in Article 120, the employee is entitled to gratuity if he completed one year of continuous service with the said employer.
Special Tax Provisions And Severance Payments
In UAE, there is no tax applicable on income from employment, hence, no deduction at source.
Allowances Payable To Employees After Termination
- Compensation for arbitrary termination equivalent to the period until the end of the contract, or three month’s wages, whichever is shorter.
- Payments equivalent to the balance of unutilized leave or any part thereof.
- Payments for overtime or any balance of wages due and not yet paid.
- End of service gratuity calculated on the duration of the employment.
- Air ticket or value of the ticket to home country unless the employee is employed with a new sponsor in UAE.
- Repatriation expenses if agreed.
- Notice Pay.
- Compensation for arbitrary termination/dismissal.
- Payment equivalent to unutilized leave or any part thereof.
- Payment of overtime or balance salary.
- Other allowances until the termination of the employment.
- Air ticket or value of the ticket to the home country or the place where they mutually agreed.
- Repatriation expenses if agreed.
Time Limits For Claims Following Termination
A complaint must be made before the Labour Ministry office within one year from the date in which the amount or the entitlement becomes due, otherwise, it will be time-barred. No claim will be admitted if the provisions regarding submitting the complaint to the Ministry are not adhered to.
Due to Covid 19, employees can now file complaint by online system and concerned officer from MOHRE will call the complainant to verify the complaint and details of the case. If the employee is outside the country, power of attorney holder of the employee can file complaint online and the officer from MOHRE will call the power of attorney holder to verify the details.