The process of terminating an employment contract has been changed recently according to the new federal labor law provisions in United Arab Emirates – Law No. 33-year 2021 regarding the regulation of employment relationships which came into effect on 2nd February 2022.
Employees must be notified of their termination during the probation period
Previously, during the probation period, employers had the right to terminate the employment contract with immediate effect with no required notifications.
Now, during the probation period, which is capped at 6 months, the employer still has the right to terminate the employment contract through 14 days’ notice or with immediate effect but must compensate the employee for a 14-day salary on the total salary bases.
If the employee wishes to terminate the employment contract during probation period
In the event the employee wishes to terminate the contract during the probation period, there are 2 scenarios as follows:
In the first scenario if the employee wants to move to work with another employer; in such case, the employee must notify the employer with a 1 month's notice, and
the new employer must compensate the previous employer for all the expenses incurred when hiring the employee.
In the second scenario if the employee desires to terminate the contract and leave the country, the employee must serve a 14 days’ notice to the employer.
Penalties for disregarding the rules of the notice terms
Not respecting the rules relating to the required notice period might put the party in breach of such rules under penalties. The employee's work permit might be canceled for one year, and the employer might pay fines.
Termination of the limited labor contract before the end of its term
Any party that wishes to terminate the contract during its term must send a legal notice to the other party, a one-month notice with the option to extend to 3 months maximum according to the new labor law. The question is, will the terminating party be obligated to compensate the other party because of such termination.
In the previous canceled Federal Law No. (8) of 1980 concerning the Regulation of Labor Relations, it was stipulated clearly that if the employer terminates the contract for any reason not related to the performance of the employee or for not a valid reason, then the employer must compensate the employee with a payment equal to the value of the remaining term of the contract or an amount equal to the employee’s total salary for three months, whichever is less.
Suppose the situation is the other way around, meaning the employee desires to terminate the contract for reasons unrelated to the employer's fault. In that case, the employee must compensate the employer for a value equal to the remaining period of the contract or an amount equal to the total employee’s salaries for 6 weeks, whichever is less.
In the new Labor Law (Federal Decree-Law No. 33 of 2021 and its subsequent executive regulation No 1-year 2022, the compensation in the event of terminating the employment contract before the end of its term has not been mentioned at all. So, the courts shall issue judgments in similar cases very soon and establish guidance in such cases. It is advisable to agree on these expected cases once the employment contract is signed.
HOW CAN WE HELP?
Hamdan Al Shamsi Lawyers and Legal Consultants are perfectly positioned to assist our clients in respect of all claims in the Dubai Courts.
Our firm has three divisions including (1) the DIFC team; (2) the UAE Litigation team; and (3) the Corporate team, and currently deal with a network of other law firms around the world including the USA, UK, France, Italy, Germany, Saudi Arabi, Oman, Kuwait, Bahrain, Jordan, Lebanon, China and Australia.
Our specialized lawyers in Employment Law will be able to further assist and answer any questions you may have.