The United Arab Emirates has implemented a new labour law, Law No. 33 of 2021, since 02.02.2022, which brought significant changes to the employment landscape.
This article provides essential information on the termination of employment in the private sector under the Federal Labour Law, excluding the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) free zones.
It explores the various aspects of early termination of employment contract, including ordinary and extraordinary terminations, termination of fixed-term contracts, and termination during the probationary period.
Table of Contents
Early termination of employment contract -Overview of the UAE Labour Law.
The UAE Labour Law applies to all private sector employees working in the UAE, regardless of the employer’s location. It takes precedence over rules issued by other free zones and governs the legality and consequences of employment termination.
However, the DIFC and ADGM have their legal systems for labour law exclusively within their zones.
Abolition of Permanent Employment Contracts.
Under the new labour law, permanent employment contracts are no longer permitted. Only fixed-term contracts with a maximum duration of three years are allowed, which can be renewed or extended multiple times.
The aim is to enhance the flexibility and sustainability of the labour market in the UAE.
Ordinary Termination of Permanent Employment Contracts.
Until 01.02.2023, ordinary termination of permanent employment contracts requires adherence to specific notice periods:
- Less than 5 years of service: 30 days’ notice
- More than 5 years of service: 60 days’ notice
- More than 10 years of service: 90 days’ notice
During the notice period, the employee must continue to perform their duties and receive their regular salary.
Extraordinary Termination of Permanent Employment Contracts.
Extraordinary termination of permanent contracts is still possible until 01.02.2023.
For an employer to terminate the contract, there must be a case of serious misconduct by the employee, such as intentional damage to the employer’s property or physical assault on colleagues. Similarly, an employee can resign without notice if the employer violates contractual obligations or engages in workplace harassment.
Termination of Fixed-Term Contracts.
Starting from 01.02.2023, fixed-term contracts will be the only valid form of employment contract. Termination of these contracts is regulated by Article 42 of the new labour law.
Termination by Expiry of Contract Duration.
Fixed-term contracts typically end upon the expiry of the agreed duration. The contract must explicitly state the duration, although extensions can occur through explicit or implicit agreement.
Termination by Agreement, Death, or Total Incapacity:
- Termination by Agreement.
Termination agreements must be in writing and cannot circumvent labour law provisions protecting the employee’s rights.
- Termination due to Death or Total Incapacity.
The employment contract terminates in the event of an employee’s death or total incapacity. Total incapacity requires a medical certificate, while partial incapacity may lead to a change in employment if requested by the employee.
Termination by Notice.
- Ordinary Notice.
Termination of fixed-term contracts by notice is possible if there is a legitimate reason, such as the employer’s bankruptcy or exceptional economic reasons beyond their control. A notice period of at least 30 days (up to 90 days) applies unless otherwise specified in the contract.
- Extraordinary Notice.
Extraordinary termination of fixed-term contracts is now permissible under the new labour law, similar to the conditions outlined for extraordinary termination of permanent contracts.
Termination during the Probationary Period.
During the probationary period, the employer must provide a minimum notice period of 14 days for termination. Different notice periods apply based on whether the employee intends to transfer to another employer or leave the UAE altogether.
FAQs about early termination of employment contract.
Understanding the early termination of employment contracts in the UAE is crucial for employers and employees. The new labour law has introduced significant changes, including abolishing permanent contracts and implementing fixed-term contracts.
Individuals need to familiarize themselves with the specific provisions regarding ordinary and extraordinary terminations, termination of fixed-term contracts, and termination during the probationary period.
Should any legal assistance be required, Younis Mohammed Al Blooshi, a renowned labour lawyer and legal consultant, is highly recommended for labour contract cases in the UAE.
Contact the office of Younis Mohammed Al Blooshi via Whatsapp. Click here. Or visit us at our address: Sobha Ivory 1 – Al Amal St – Business Bay – Dubai. You can also call us on phone: 00971589984123.
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.