Dubai Law Regarding Employment Contracts
UAE’s federal labour law, Federal Law No. 8 of 1980,
and its amendments (UAE Labour Law)
Part IV – Notice Period and Mutual Termination
Unfortunately, there are times when Dubai lawyersand company owners/managers must terminate an employee’s contract. By following proper procedure and consulting qualified local advocates in Dubai, you can avoid expensive penalties whilst ensuring a smooth transition for both employer and employee.
UAE Labour Law employment contracts must contain a notice period of no less than thirty days and no more than three months(UAE Labour Law, Articles 117 &Ministerial Decree 765 of 2015).Once the notice period is set, if either party wants to shorten or eliminate the notice period, compensation is due to the other party (UAE Labour Law, Article 119). The employment contract remains in full effect during the notice period unless the employer decides the employee is not required to perform the job requirements.
Remember that for any type of employment contract, the parties can agree to terminate the agreement mutually, which can remove any fear of liability and lead to a more harmonious ending.
Hiring a law firm with qualified local advocates in Dubai who are familiar with Dubai law and UAE Labour Law can prevent costly mistakes. Contact Abdulla Al-Suwaidi Advocates for more legal advice.
Part V – Termination of Limited and Unlimited Contracts
Though UAE Labour Law is very specific regarding how to terminate labour contracts and when an employer and employee may be penalized for improper termination, Dubai lawyers have found that mistakes are common and costly. Below is advice from professional legal advocatesin Dubai on terminating contracts.
Termination of an Unlimited Contract
Either party may terminate an unlimited employment contract by providing the proper notice; however, an employer must have a valid work-related reason for termination (UAE Labour Law, Article 117).If an employer does not have a valid work-related reason, then the employee may pursue a claim for arbitrary dismissal for an amount of up to three months’ gross salary (UAE Labour Law, Article 122 &Ministerial Decree 765 of 2015).
Termination of a Limited Contract
Unlike unlimited contracts, terminating a limited contract must be for a reason listed under Article 120 (for the employer) and Article 121 (for the employee) of the UAE Labour Law. If the employer terminates a limited contract for any reason other than those listed under Article 120 (and if the employer does not follow proper procedures as outlined in the UAE Labour Law, including Articles 102 to 112), then the employee may pursue a claim for arbitrary dismissal for an amount of up to three months’ gross salary (UAE Labour Law, Article 122 &Ministerial Decree 765 of 2015).
Similarly, if the employee terminates a limited contract for any reason other than those included in Article 121, then the employer may claim up to 45 days’ gross salary or gross salary for the remainder of the contract, whichever is shorter (UAE Labour Law, Article 116). Ministerial Decree 765 of 2015 changes this penalty to “up to three months”; however, it is not yet clear how the Ministry of Human Resource and Emiratisation will apply this decree.
Limited contracts also terminate upon their expiry date, at which point neither party is penalised and the employee receives the end of service gratuity.
When implementing termination and involving local advocates in Dubai, it is important to hire those who are familiar with Dubai law and UAE Labour Law in order to prevent costly mistakes. Contact us for more legal advice.