Employment in the UAE, like anywhere else, can be subject to termination.
This article is about the consequences of termination of employment in UAE, which is crucial for employers and employees to know.
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Consequences of termination of employment in UAE.
Upon termination of employment by the employer, the employee may be entitled to several claims, including:
- Statutory severance pay.
- Compensation for arbitrary dismissal.
- Compensation for non-observance of the notice period.
- Reimbursement of costs for returning home.
Statutory Claim for Severance Pay.
Statutory severance pay entitlement varies for domestic and foreign employees. Both are entitled to severance pay, provided the employment relationship lasted at least one year.
Compensation for Arbitrary Dismissal.
In addition to severance pay, the employee may be entitled to fair compensation for arbitrary dismissal. The amount of compensation, up to three months’ salary, is at the court’s discretion.
The courts in the UAE often rule in favour of the employee in such cases.
Compensation for Non-Observance of Notice Period.
If the employer does not observe the statutory notice period in the case of ordinary termination, the employee is entitled to compensation, even if no damage has occurred.
Reimbursement of Costs for Returning Home.
Foreign workers are entitled to reimbursement of the costs of returning home at the employer’s expense.
This is unless they start a new employment relationship in the UAE or terminate it and have enough means to fund their return home.
Changes in the Employer’s Status.
Any changes in the employer’s corporate structure or legal status do not generally affect the continuation of employment contracts.
The employment contract continues, and any severance claims continue to accrue.
Article 10 of the new labour law states that the employment contract must specify non-compete clauses regarding time, place, and nature of work.
Moreover, a non-compete clause cannot last beyond two years from the end of the contract.
In case of a dispute arising from termination, an attempt to reach an amicable settlement must first be initiated with the Ministry of Human Resources and Emiratisation.
If this fails, the dispute is referred to the competent court.
FAQs about consequences of termination in UAE.
Understanding the consequences of termination of employment in UAE is crucial for both the employer and the employee. It ensures a smooth transition and helps to avoid any legal complications that may arise.
A legal consultant specializing in UAE labor law. He regularly publishes articles on the website and writes on various areas of UAE law, with a specific focus on labor law.