Working in the UAE makes it essential to understand each tone of the employment industry. We have created this informational piece that defines all the aspects of termination, including the critical topic of termination of employment in UAE. The relationship between employee and employer should be maintained with the certain regulations suggested by the government. This brings prosperity on both sides and mutual agreement, preventing any chaos.
Following this article, you will learn the details about the termination procedure in UAE. As per the law and order imposed by the UAE government, each aspect must be fulfilled. Acknowledging the importance of the beforehand will save you from chaos and help you go through the process smoothly.
What does termination of employment in UAE mean?
Termination of employment in the UAE is known to be the ending of an employment contract between an employer and an employee. Both of them must give written notice before termination. This typically ranges 30-90 days depending on the contract and employee’s tenure. There can be exemptions for immediate termination with reason. Employees are usually eligible for a severance payment called gratuity upon termination. The amount depends on their salary and length of service.
Termination should have a valid reason unless it’s a mutual agreement. Employers must follow authentic pathways to avoid claims of arbitrary dismissal. If an employer fires an employee unjustly or without following proper procedures, the employee may be entitled to compensation.
Types of Employee Termination in the UAE
Employee termination is divided into two types based on the duration and a few other specifications that you must differentiate. Getting a better understanding of both kinds will help you decide better and make an informed decision.
Limited-Term Contracts
Limited contracts in UAE are a specific type of employment contract in the UAE that comes with distinguished termination considerations:
- These contracts automatically terminate at the end of the designated term unless renewed by both parties.
- Early termination by either party can occur, but with consequences.
- The employer can terminate early but must provide written notice as per the contract and UAE Labour Law (typically 30-90 days).
- The employee can terminate early but may be liable for compensation to the employer. This is usually half of their remaining salary for the contract period or half of three months’ salary, whichever is less. The contract may specify a different amount.
Unlimited-Term Contracts
An employment contract without a set expiration date is known as an unlimited-term contract. It represents a long-term commitment between the company and the worker, providing security and stability for both.
- The agreement is in effect until either side ends it.
- Compared to limited-term contracts, it provides greater flexibility for the business and the employee.
- Generally, considered to offer workers more employment security.
- Needs to follow certain notice guidelines or have a valid reason to end the relationship.
Employee Rights in the Termination Process as per UAE Labour Law
Employees can claim the rights that are provided to them by the government of UAE. According to the UAE labor law, the employee gets a range of benefits even during the period of termination and also after it. If you are employed by any company, you must consider all these factors beforehand.
Notice Period
A mandatory aspect of this protection is the notice period in UAE. It mandates a timeframe for either party to notify the other of their intention to terminate the contract. The standard notice period for unlimited-term contracts in the UAE is 30 days. However, the employment contract itself can specify a longer period, so be sure to check your specific contract for details
Both you and your employer are legally responsible for providing written notice before terminating the contract. Failing to follow the regulations could result in financial penalties.
There are exceptions to the notice period requirement. These typically involve cases of misconduct or severe breaches of contract by either party. For example, if you are caught stealing from your employer, they may be able to terminate your employment immediately without providing notice.
Salary Clearance
During this transitional phase, your rights to compensation and benefits are protected by UAE labor law. You are legally entitled to your entire salary and any customary benefits throughout your notice period, as specified in your employment contract in UAE. This covers base pay as well as any applicable bonuses and allowances.
Other than this, Employees facing termination are given financial security under the UAE labor legislation through a severance benefit known as an End-of-Service Gratuity. This serves as a safety net while things are changing.
- Upon termination, employees who have worked continuously for one or more years are eligible for a gratuity.
- Your base pay and duration of service are the basis for determining the gratuity amount. The reward increases with the length of employment.
- If the reason for termination is your wrongdoing or a breach of contract, you might not be eligible for a gratuity.
Healthcare
The UAE labor law doesn’t explicitly guarantee the continuation of health insurance coverage for employees after termination. If your health insurance was provided by your employer, coverage typically ends with your employment. The employer has no legal obligation to extend it.
In very specific situations, some employment contracts might stipulate the continuation of health insurance coverage for a limited period after termination. This would be a pre-arranged benefit negotiated within your contract and wouldn’t be mandated by law.
Employment Termination by the Employer
In the UAE, there are strict guidelines for terminating employment by employers. It safeguards both employers and employees. The main points are as follows:
- Notice Periods: Written notice of termination must be given by both the employer and the employee, usually between thirty and ninety days in advance. There are exceptions for termination for good reason.
- End of Service Gratuity: Upon termination, workers who have worked for a minimum of a year are entitled to a severance payment. The sum is determined by their length of employment and pay.
Employers must follow the right procedures and have a good justification for terminating employees to prevent allegations of wrongful dismissal.
Employment Termination by the Employee
In the UAE, quitting your job also requires adhering to certain regulations:
- Notice Periods: If you want to leave employment, you normally have to give written notice, usually 30 days in advance (but the contract may stipulate a different amount of time).
- Exclusions: Although they are uncommon, there may be exclusions for resignations with immediate effect owing to grave concerns.
- Termination of Contract Clause: Early termination clauses in fixed-term contracts may involve financial penalties for the departing employee.
- Liabilities: You are still required to carry out your job’s obligations during the notice period.
Immediate termination of employment UAE
UAE labor laws protect both employers and employees by requiring written notice prior to termination. There are, nevertheless, several circumstances that permit abrupt termination without warning:
- Employee Misconduct: Serious offenses that seriously impair the employer’s business, such as theft, assault, fraud, or egregious negligence, fall under this category.
- Contract Breach: An employee may be entitled to an immediate termination if they break a significant provision of their employment contract. For instance, you can be fired right away if you work for a competitor or fabricate your credentials.
- Employer Investigation: If possible wrongdoing is the subject of an investigation, the employer may do so and suspend the worker without pay while the matter is being looked into. If the investigation finds significant misconduct, termination may occur right away.
Sample For Termination of Employment Letter UAE
 [Company Name]
[Company Address]
[Date]
[Employee Name]
[Employee Address]
Dear [Employee Name]
We are delighted to offer you the position of [Job Title] at [Company Name], effective [Start Date]. This Termination letter in UAE covers the terms and conditions of your employment.
We wish you all the best in your future endeavors.
Sincerely,
[Your Name]
[Your Position]
[Company Name]
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