Termination of an Employment Contract During the Probation Period Under Federal Labour Law No. 33 of 2021

The process of terminating an employment contract changed with the new Federal Labour Law No. 33 of 2021 regarding the regulation of employment relationships, which took effect on 2 February 2022.

Employees Must Be Notified of Termination During Probation

Previously, employers could terminate an employment contract during probation with immediate effect and no required notice. Now, during the probation period (capped at 6 months), the employer must give 14 days' notice, or terminate with immediate effect while compensating the employee for 14 days' salary based on total salary.

The Employee Wishes to Terminate During Probation

If the employee wants to terminate the contract during probation, there are two scenarios:

First scenario: if the employee wants to move to another employer, the employee must give one month's notice, and the new employer must compensate the previous employer for all expenses incurred in hiring the employee.

Second scenario: if the employee wants to terminate the contract and leave the country, the employee must give 14 days' notice.

Penalties for Disregarding the Notice Rules

Failing to respect the required notice periods can expose a party to penalties: the employee's work permit may be cancelled for one year, and the employer may face fines.

Termination of a Limited Contract Before the End of Its Term

A party wishing to terminate the contract during its term must send the other party legal notice — one month, extendable up to three months under the new labour law. The previous (cancelled) Federal Law No. 8 of 1980 stipulated that if the employer terminates without a reason related to the employee's performance, the employer must compensate the employee with an amount equal to the remaining term of the contract or three months' total salary, whichever is less; if the employee terminates without a valid reason, the employee must compensate the employer for the remaining term or six weeks' total salary, whichever is less.

Under the new Labour Law (Federal Decree-Law No. 33 of 2021 and its Executive Regulation No. 1 of 2022), compensation for terminating a contract before the end of its term is not addressed at all, so courts are expected to issue judgments establishing guidance in such cases soon. It is advisable to agree on these scenarios explicitly when the employment contract is signed.

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