UAE notice period rules: All you need to know

The recently detailed guidelines aim to streamline the process of contract termination in accordance with the interests of both parties involved.

Updated regulations include:

• Notice period duration: The notice period must range between 30 to 90 days. This flexibility allows for industry-specific norms while ensuring a reasonable transition period for both employers and employees.
• Obligations during notice period: Employees are required to fulfill their duties throughout the notice period, maintaining productivity and professionalism.
• Compensation for unserved notice: If either party fails to honor the notice period, they must pay a “notice period allowance” to the other. This allowance is calculated based on the worker’s last received wage and is equal to the full notice period or the remaining portion thereof.
• Job search provision: When an employer terminates a contract, the employee is entitled to one unpaid day off per week during the notice period to search for new employment.
• Piece-rate workers: For employees paid on a piece-rate basis, the notice allowance is determined by their average daily wage.
• Mutual agreement: The regulations allow for reducing or waiving the notice period if both parties agree.
• Termination situations: The law outlines specific situations where a contract may be terminated, including expiration of the contract term, mutual agreement, death of the employer (if the contract is related to their entity), death or permanent disability of the worker, and closure of the establishment.
• Termination without notice: Both employers and employees can terminate contracts without notice under certain circumstances. For employers, these include situations such as employee fraud, substantial material loss to the company, or repeated violations of safety instructions. Employees can terminate without notice if the employer fails to meet contractual obligations, engages in workplace harassment, or exposes workers to grave danger.
• Arbitrary dismissal: The law prohibits arbitrary dismissal, specifically stating that termination due to an employee filing a legitimate complaint or lawsuit against the employer is illegal. In such cases, courts can order compensation of up to three months’ wages.
• Changing jobs after termination: Employees can work for another employer after contract termination if their previous contract ends and is not renewed, is terminated during its term in accordance with the law, or if the employer terminates the contract without giving a reason.
• Grace period: After contract termination, employees are granted a grace period to either obtain a new work permit and residency or leave the country.
• Work permit restrictions: An employee may be barred from obtaining a work permit for one year if they terminate the contract during the probation period (provided the employer didn’t breach contractual obligations) or if a ‘work abandonment’ report against them is found to be true.

The UAE government portal as per Article 42 of the Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, the ‘UAE Labour Law details:

Situations in which an employment contract may be terminated

• 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 (details below)
• 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 fulfil the conditions for renewing the work permit for any reason beyond the control of the employer.

Notice period of termination

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).

Additionally, the following provisions must be adhered to:

• Work as agreed upon in the contract must be performed during the notice period
• The worker is entitled to his full wage as per the contract, for the notice period
• The party who fails to serve the notice period must pay the other a ‘notice period’ allowance, which is equal to the worker’s wage for the full notice period or in proportion to the remaining period. The allowance for the notice period is calculated according to the last wage received by the worker.
• In the event that the employer terminates the contract, the worker is entitled to an unpaid leave of one day per week during the notice period to search for another job.

Termination of contract without notice by the employer

Article 44 of the UAE Labour Law mentions that an employer may terminate the services of the employee without notice, if the latter:

• Adopts a false identity or submits forged documents or certificates
• Commits an error causing substantial material loss to the employer or if he deliberately damages the properties of the employer and acknowledged the same. Note that the employer must inform MoHRE about the incident within seven working days from having knowledge of the same.
• Violates instructions concerning safety of the workers and the place of business provided that such instructions were displayed in writing at conspicuous places or verbally informed to an illiterate employee
• Fails to perform his basic duties under the employment contract and persists in violating them despite warning him twice of dismissal, if the same is repeated
• Divulges any secrets of the establishment resulting in losses or a missed opportunity to the employer, or achieving a personal benefit for self
• Is found to be drunk or under the influence of prohibited drugs during working hours, or commits an action breaching the public morals at the workplace
• Assaults the employer, the manager or any of his colleagues during the course of his work
• Absents himself without lawful excuse for more than 20 intermittent days or more than seven successive days during one year
• Exploits his position illegally to obtain personal results and gains
• Joins another establishment without abiding by the rules and procedures in this regard.

The law stipulates that the employer may terminate without notice only after conducting a written investigation of the worker. The dismissal notice must be in writing, justified and handed over duly to the employee.

Termination of contract without notice by the employee

Article 45 mentions that an employee may terminate the contract without notice, if the employer:

• Fails to meet his contractual or legal obligations towards the worker, provided that the worker notifies the MoHRE 14 working days before the date of quitting and the employer fails to rectify the breach despite being notified by MoHRE of the same
• Assaulted or harassed the worker at workplace, provided that the latter informs the competent authorities and the MoHRE within five working days from the date on which he was able to report
• Instructed the worker to perform a work fundamentally different from the work agreed upon in the employment contract, without the worker’s written consent on the same, except for situations where work is absolutely required and as explained in Article 12 of the UAE Labour Law
• Failed to remove the factors that pose a grave danger and/or threaten the workers’ safety or health despite being aware of it. Article 26 of Cabinet Resolution No. 1 of 2022 on the Implementation Regulation of Federal Decree Law No. 33 of 2021 spells out circumstances of grave danger at the workplace.