The Farewell - Employment Termination in the UAE
Introduction
End of employment by resignation or termination - image showing a note of ‘I Quit’ on a laptop
Image credit - Unsplash
While both employee and employer hope for the best when the employment relationship starts, it’s wise to know one’s exit rights and options. Whether it’s for employees who need to navigate the uncertainty in today’s world with restructuring, lay-offs, off-shoring, etc. which are far more common than they were a decade ago (not just in the region, but across the world) - whether reactively or proactively by finding a job, or for HR personnel who need to act based on management decisions on such restructuring and redundancy decisions, or for entrepreneurs to be aware of how potential claims can affect their P&L, the information is relevant.
Termination of UAE employment with notice period
Either employer or employee can terminate the employment contract in the UAE with the notice period mentioned in the contract, which can range between 30 and 90 days, however, both are not treated the same way. That’s because - when the employer terminates, it’s more serious, because the employer’s action affects a person’s livelihood and their family. Hence, while an employee can resign for routine cases like finding another job, that’s not really the case for the employer, they can’t just say they found another employee - they either need to justify it with a business reason (e.g. restructuring due to financial reasons) or based on employee performance - both of which are explained below.
Termination with notice period is said to have the alternative of making payment in lieu of the notice period, which for employers can be said to be garden leave, but, employees need to be more careful, and they should not assume that paying off the notice period by salary (as is done in other countries) is a safe way, since serving the notice period properly is a requirement in the UAE to continue safely to other employments. While the environment has moved on from bans which were earlier placed as a matter of routine, some bans still exist, and it’s better to finish the notice period properly to the extent possible. Of course, the level of restrictions and strictness also depends on whether the visa is sponsored by the employer or not.
As far as garden leave is concerned, it’s not an entitlement.
Termination of employment without notice period
Termination by Employer in the UAE
Termination of employment due to major issues - image showing a person looking at a paper in an office outside a meeting
Image credit - Unsplash
When the employer can terminate without notice (which are considered to be serious cases) - where employee did any of the following:
(i) impersonated another person, or submitted forged certificates or documents.
(ii) committed a mistake that resulted in gross physical losses to the employer or deliberately damaged the properties of the employer, provided that the employer informs the Ministry of the incident within seven working days from the date of being aware of the occurrence of the incident.
(iii) violated the instructions of the establishment’s rules relating to the safety of the workplace/workers, provided that they are written and hung in a visible place and the employee is informed of the same.
(iv) did not perform his/her basic duties according to the employment contract and continued breaching them despite conducting a written investigation for this reason and was notified and warned of dismissal twice in case of repetition.
(v) disclosed any work secret related to industrial or intellectual property, which resulted in losses to the employer, missed opportunity or achieving a personal benefit for the worker.
(vi) is drunk during working hours, is under the influence of narcotics or psychotropic substances, or commits an action breaching the public morals at the workplace.
(vii) assaults during work the manager in charge or any of his superiors or colleagues at work, by word, action or any form of punishable assault.
(viii) is absent without a legitimate reason (accepted by the employer) for more than (20) twenty intermittent days during one year or more than (7) seven consecutive days.
(ix) exploited his/her position in an illegal way to obtain personal results and gains.
(x) joins another establishment without abiding by the applicable rules and procedures.
As you can see - in several of these, the employer has to follow due process; in some others, there need to be actual losses; and in yet some others, the violation needs to be severe. In other words, this article can not be invoked on minor performance or day-to-day issues.
For people who have been staying in the UAE for a long time, Article 120 was the name by which they knew this termination, however, not only has that Article number changed in the new labour laws (Article 44 now), but also, some of the details have changed from earlier.
Termination by Employee in the UAE
When the employee can terminate without notice - which are considered to be serious cases (but lesser in number as compared to the above list):
(i) The employer’s breach of their obligations towards the employee stipulated in the employment contract or the applicable laws, provided that the employee notifies the Ministry fourteen (14) working days before the date of quitting work and no rectification occurred by employer after this notification.
(ii) Employer or its legal representative assaulted the worker, committed violence or harassment against employee at work, provided that employee informs the Ministry/competent authorities within (5) five working days from the date on which he/she was able to report.
(iii) If there is a grave danger at the workplace that threatens the employee’s safety or health, provided that the employer is aware of its existence and does not take any actions that indicate its removal.
(iv) The employer instructs the worker to perform a work fundamentally different from the work agreed upon in the employment contract, without obtaining the worker’s written consent on the same (except for certain stipulated necessity cases e.g. prevention of accident).
Arbitrary Dismissal and Compensation in the UAE
Arbitrary dismissal and compensation in the UAE - image showing coins and artificial models of a man and a woman sitting on opposite sides with worried postures
Image credit - Unsplash
The rules to claim compensation for arbitrary dismissal have become stricter under the new labour laws (2021-2022). They require the employee to prove that they were terminated only because and after they filed a complaint against the employer, which makes it very restrictive. Previously, it was not this difficult, and employees could invoke arbitrary dismissal under many scenarios. Even then, 3 months’ salary was the maximum that the court would pay (based on the duration of the employment and other such factors), while the misconception generally in the market was that 3 months’ salary is a guaranteed compensation. It’s possible that the misunderstanding existed because, earlier, when limited and unlimited contracts both existed, the rules were different for each, and there was a penalty rule applicable to the break of limited contracts. However, now that there are no unlimited contracts anymore, and the arbitrary dismissal rule has changed, it’s a less confusing situation.
In any case, compensation should not be assumed as guaranteed. Many of the bigger companies choose to give 1-3 months of additional salary (in addition to the notice period), to protect themselves from potential claims and litigation, but that’s discretionary, employees cannot assume it’s their right.
Other methods of end of employment in the UAE
Termination during probation has different rules - you can check that out under this post.
Since now all contracts are fixed term, no unlimited contracts allowed any more, technically speaking there is an expiry of such contracts. In other words, if either party does not renew at the end of the contract, the contract ends. Having said that, the market practice is still to treat that as an administrative formality and renew. This is because an employee’s job search result will rarely align with a contract expiry, and similarly a company’s redundancy-based decisions will not always align with the contract expiry date either.
Payment for final dues at the end of employment
Payment of dues at the end of employment - image showing a jar collecting money with the note ‘Pay as you wish’
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Usually, all end of services dues like gratuity, salary and accrued leave are payable, there are only a few exceptional circumstances where the payment will not be made. It should not be assumed that all cases under Article 44 fall under that forfeiture, since the law has changed and is not the same as earlier when the dues were easily forfeited under Article 120 terminations. The notice period payment is indeed not made under Article 44 terminations, so that portion of the salary is not due, but the rest of the dues are not easy to forfeit. For any forfeitures like end of services, the exceptional cases and their repercussions have to be duly proved by the employer - it’s best for employers to consult MOHRE and not assume that dues can be withheld.
Another thing to keep in mind is that visa cancellation document says that the dues have already been paid, but usually visa cancellation happens prior to the payment of dues. This is because employees usually want the visa to be cancelled fast to be able to give it to the new employer to start processing there, but the payroll cycle and payments operate with different timelines (maximum of 14 days is allowed). In such cases, employees have a few options:
If they trust the employer based on the employer’s track record of always paying, they can record the dues via email and record in writing that they signed on the visa cancellation only to process the visa cancellation
If they want to be totally safe, they can sign the visa cancellation after they receive the dues, and manage it accordingly with the next employer
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