Understanding UAE Termination and Severance Laws

Notice Period and Severance Pay in the UAE: What does Termination Mean in Practice?

Termination of employment is always a sensitive and emotionally challenging process, especially for someone working in the United Arab Emirates, far from home. The local labor law strictly regulates termination and severance issues, which directly affect many foreign workers. It is therefore worth understanding when and under what circumstances notice periods and severance pay are due, and how the reason for dismissal affects these rights.

Length of Notice Period: Always Mandatory to Observe?

According to UAE labor law, termination of employment can be initiated by either the employer or the employee, provided that the other party is notified in writing. Article 43 of Federal Law No. 33 of 2021 specifies that the notice period must be at least 30 days and no longer than 90 days. This means that if the employment contract does not specify otherwise, the general practice is to expect at least one month's notice.

It is important that during the notice period, the employee is obligated to work unless the parties agree otherwise. The employer cannot simply say, "You don't need to come from tomorrow," unless they are willing to pay the full salary for the notice period in a lump sum – often referred to as "garden leave."

When Is Severance Pay Granted?

According to UAE labor law, officially termed end-of-service gratuity, severance pay is only due to employees who have worked continuously for at least one year with the employer. This is detailed in Article 51 (2).

The calculation is based on the last basic salary, not the total salary, and is as follows:

For the first five years: 21 days of basic salary per year.

For the period beyond five years: 30 days of basic salary per year.

This means, for example, if someone is dismissed after 11 months, they are not entitled to severance pay, even if performance issues are cited.

Payments Upon Termination

The employer must pay all entitlements to the employee within 14 days after termination of employment. This includes not only the remaining salary but also any items specified in the contract, company policy, or law. This obligation is stipulated in Article 53, and if the employer does not comply, the employee has the right to contact the Ministry of Human Resources and Emiratisation.

In such cases, the authority may conduct an investigation, and if the employer is found to violate the law, they may face fines or other penalties.

Resolving Disputes and Claims

If an employee feels their rights have been violated – for example, if they have not received their notice pay or were denied severance pay without justification – the first step is to negotiate with the employer. If this does not lead to a resolution, an official complaint can be filed with the labor ministry, which acts as a mediator to resolve the dispute. If this also fails, the next step could be labor court.

It is essential to have written evidence for all claims: employment contracts, pay slips, email correspondence, HR communications. These should be kept even if employment ends seemingly in a friendly environment.

What Happens If the Employee Does Not Work the Full Notice Period?

If an employee voluntarily leaves and does not work through the entire notice period, the employer may claim compensation equivalent to the wages for the remainder of the notice period. This is also a right specified by law, and employers may exercise it, especially if the sudden departure of an employee causes operational disruptions.

The Significance of the Reason for Dismissal

For most employees, the crucial question is whether the reason for dismissal – such as performance, downsizing, or behavioral issues – affects benefits. The answer is both yes and no:

In cases of performance issues, unless it involves gross negligence or disciplinary action, the notice period should be respected, and if a year has elapsed, severance pay is also due.

In the event of disciplinary action or serious breach of contract, immediate dismissal may occur without severance pay or notice period.

Summary

The UAE labor legal system clearly and in detail regulates the framework for termination of employment. The key rules are:

Notice period: 30-90 days, communicated in writing.

Severance pay: Due after at least a year of continuous employment.

Payments: Employer must pay all entitlements within 14 days.

Legal remedies: Complaint to the ministry, if necessary court proceedings.

Every employee is advised to thoroughly understand the terms of their contract and consult a labor law specialist if necessary. This is especially important abroad, where the legal system and language differ from the familiar. Adequate knowledge not only provides financial benefits but also peace of mind and a sense of security during uncertain times.

(Source based on Labor Law Article 51 (2).)