UAE Law and Practice Contributed by: Amir Alkhaja, Gerry Rogers, Daria Selivanova and Danila Kriuchkov, Habib Al Mulla & Partners
Termination with Notice Either party may terminate a contract by giving notice in writing (minimum 30 days’ notice, up to 90 days if agreed). The law requires a “legiti - mate reason” for termination by the employer. This is somewhat analogous to a concept of ”fair dismissal” – while the law doesn’t list all valid reasons, it implies that termination must relate to work requirements or employee per - formance/conduct. Unjustified termination (eg, firing someone arbitrarily or for filing a complaint) can be deemed arbitrary (unlawful) dismissal, entitling the employee to compensation. Under the new law, such compensation is capped at three months’ gross salary, which is similar to the previous law’s cap on arbitrary dismissal awards. Legitimate reasons for termination include redundancy (role no longer needed), poor perfor - mance (if documented and after warnings), busi - ness downsizing or employee’s inability to meet job requirements – as long as proper procedure and notice are given. The UAE is not strictly a just-cause jurisdiction in the sense of requiring the employer to prove cause in every case, but if the employee challenges the termination, the employer should show it was for a valid work- related reason or the employee’s performance. If the court finds the termination arbitrary (for example, due to discrimination or because the employee filed a legal claim), it can award the statutory compensation in addition to other end- of-service dues. Termination for Cause The new Labour Law lists specific grave mis - conduct that allows an employer to terminate without notice or end-of-service gratuity. These include: the employee committing serious neg - ligence causing material loss (reported within seven days), disobeying safety instructions,
revealing trade secrets, committing a crime at work (like theft or assault), harassment at work or repeated intoxication at work, etc. If an employee is terminated for cause under these grounds, the employer must have a written investigation and evidence. Summary dismissal is a high bar; if the employee disputes it in court, the employer must substantiate the allegation, otherwise the court may convert it to a regular termination with notice and compensation. Resignation An employee can resign with notice (30–90 days as per contract). The employer is obligated to accept it and proceed with cancellation of the work permit. If an employee resigns without serving the notice fully, they might have to com - pensate the employer for the shortfall (wages in lieu of notice). There is no concept of employee “at-will” resignation without notice either – notice is required unless both sides agree to waive it. End-of-Service Benefits Upon any termination (dismissal or resignation), an employee with less than one year of service is entitled to an end-of-service gratuity – a lump- sum severance. This is calculated as 21 days’ basic wage per year of service for the first five years, and 30 days’ basic wage per year beyond five years (basic wage excludes allowances). However, if an employee resigns with less than five years of service under an unlimited contract (as was the old rule) they got a reduced gratuity (this was eliminated in the new law; now resign - ing or terminating yields the same full gratuity). For fixed-term contracts, resigning before the contract ended used to potentially forfeit gratu - ity; the new law equalised treatment. Thus, in 2025, regardless of resignation or termination, the gratuity accrues fully unless the firing was for
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