United Arab Emirates Employment Guide

Navigating Employment Termination in the UAE: A Professional Guide

Terminating employment relationships requires careful adherence to complex regulations and country-specific requirements. The separation process should always be managed collaboratively between employers and key stakeholders, often involving special considerations and mandatory steps depending on the termination circumstances.

Legal Termination Methods

Employers may terminate contracts unilaterally at any time when proper legal notice requirements and compensation are fulfilled. Immediate termination without notice requires valid justification.

Compliant termination approaches include:

• Voluntary employee resignation
• Mutual agreement termination
• Employer-initiated termination:
  • Without cause (with required notice and compensation)
  • With immediate cause (no notice required):
    • During probation period
    • Objective grounds for dismissal
    • Disciplinary dismissal
    • Performance-related termination due to unsuitability
• Contract expiration

Notice Period Requirements

The minimum notice period is one month, with a maximum not exceeding three months. The specific duration should be mutually agreed upon between employee and employer, considering the employment context and local regulations.

Understanding End-of-Service Benefits

In the UAE, most terminated employees (except those dismissed under Article 120 of the Labor Law) qualify for end-of-service benefits. The calculation follows a structured approach: 21 days' wages for each of the first five years of service, and 30 days' wages for each subsequent year, capped at a maximum of two years' total compensation.

To mitigate unexpected financial exposure from termination scenarios, SailGlobal incorporates end-of-service benefit accruals into all employment agreements for this jurisdiction. With extensive expertise in global litigation risk management, SailGlobal's accrual calculations reflect current common law, statutory rights, and local best practices. Should an employee resign or become ineligible for benefits, any unused accruals are returned to the client.

Practical Case Examples

Consider a marketing manager with seven years of service earning AED 25,000 monthly. Their entitlement would include 105 days for the first five years (5×21 days) plus 60 days for the additional two years (2×30 days), totaling 165 days' wages as severance.

Another scenario involves an IT specialist terminated during probation for performance issues. Since this qualifies as termination with cause during probation, no notice period or severance payment would typically apply, though proper documentation remains essential.