Terminating Employment Contracts and Arbitrary Dismissal Under Federal Labour Law No. 33 of 2021

Either party of the employment contract can terminate the employment contract, provided that the party who wishes to terminate must grant the other party a written notification of termination — a minimum of 30 and a maximum of 90 days, as stated in the employment contract.

Employers and employees still have the right to terminate the contract with immediate effect without granting a notice period. The party who did not abide by the notice period shall pay the other party compensation, called notice period allowance, even if the absence of notification does not cause damage to the other party; the compensation is equal to the worker's wage for the full notice period or the remaining part of it. The notice period allowance is calculated according to the last wage received by the worker for those paid monthly, weekly, daily, or hourly, and according to the average daily wage for those paid on a piecework basis.

Employer Can Terminate the Contract Without Notice in Certain Cases

The employer may dismiss the employee without notice and without paying any notice allowance in certain cases, after conducting a written investigation. The dismissal decision must be in writing and justified, and handed to the worker in any of the following cases:

• It is proven that the worker impersonated another person or submitted forged certificates or documents.
• The worker committed a mistake that resulted in gross physical losses to the employer, or deliberately damaged the employer's property and acknowledged the same, provided the employer informs the Ministry within seven working days of becoming aware of the incident.
• The worker violated the establishment's by-laws related to the safety of work, workers, or the workplace, provided these are written, displayed in a visible place, and the worker is informed of them.
• The worker did not perform his basic duties under the employment contract, and continued the breach despite a written investigation, and after being warned twice of dismissal for repetition.
• The worker disclosed a work secret related to industrial or intellectual property, resulting in losses to the employer, a missed opportunity, or a personal benefit to the worker.
• The worker is drunk during working hours, under the influence of narcotics or psychotropic substances, or commits an act breaching public morals at the workplace.
• The worker assaults, during work, the employer, manager in charge, a superior, or a colleague, by word, action, or any form of assault punishable under UAE legislation.
• The worker is absent without a legitimate reason for more than 20 intermittent days in one year, or more than 7 consecutive days.
• The worker exploited his position illegally to obtain personal results or gains.
• The worker joins another establishment without abiding by the prescribed rules and procedures.

Employees Can Terminate the Contract Without Notice in Certain Cases

The employee may quit work without notice while retaining all rights upon the end of service in any of the following cases:

• The employer breaches its obligations towards the worker under the contract, the Decree-Law, or its implementing resolutions, provided the worker notifies the Ministry 14 working days before quitting, and the employer fails to rectify the breach despite being notified by the Ministry.
• It is proven that the employer or its legal representative assaulted, or committed violence or harassment against, the worker at work, provided the worker reports it to the competent authorities and the Ministry within 5 working days from being able to do so.
• There is a grave danger at the workplace threatening the worker's safety or health, provided the employer is aware of it and fails to take action to remove it.
• The employer instructs the worker to perform work fundamentally different from that agreed in the employment contract, without the worker's written consent, except in cases of necessity under Article 12 of the Decree-Law.

Arbitrary Dismissal Has Been Removed and Replaced With Illegal Dismissal

The new employment law uses the terms “illegal termination” or “illegal dismissal.” It specifies that an employee is considered illegally dismissed only when the employer terminates the employee because of a complaint or case registered by the employee against the employer with the competent authorities — the court, the Ministry of Human Resources and Emiratisation, or any other concerned authority.

Previously, there was a long and complicated argument regarding the reasoning for terminating employees — for example, that the employee's position was no longer needed, restructuring, or the employer's financial situation — and whether such termination should be considered arbitrary. In practice, at Dubai Courts, most employees used to receive arbitrary dismissal compensation equal to 1 to 3 months of their final full salary. This has been ended and essentially amended: under the new law, there is no arbitrary dismissal compensation regardless of the reason for dismissal, except where it is proven that the dismissal was because of a complaint or case filed by the employee against the employer.

Accordingly, the employer has the right to terminate the employee for any reason, and the employee has no right to claim arbitrary dismissal compensation, except where the dismissal is shown to be because of a complaint or case filed by the employee against the employer.

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