The laws surrounding employment in the UAE come under the purview of Federal Decree-Law No. 33 of 2021. Often referred to as the UAE Labor Law, this set of rules and regulations was updated two years ago. The recent amendments brought about changes to:

• Employment contracts
• Employer-employee relationships
• Notice periods

This blog will focus on the notice period section of these updated provisions. Since the introduction of these changes, the working environment in Dubai has become even more fair and flexible to both sides. The changes to notice period rules has had a positive impact on how termination is handled by both employees and employers.

An Overview of the Notice Period in UAE

So, what is a notice period? In simple terms, it is the amount of time that you as an employee must continue to carry out your duties in between the time you inform your employer that you wish to leave the company, and your last working day.

During this window of time, everything mentioned in your contract still stands. In other words, you must continue working as normal with no changes to anything. The same is true for the employer as well.

The new UAE Labor Law states that any employee in the private sector is entitled to a notice period before they are terminated from the company. However, this can change depending on the kind of employment contract that was signed and also on the type of employment relationship between both parties. 

This change was brought about to ensure that both parties are given a fair amount of time to make the transition take place in a smooth and efficient manner, without causing any disruptions to either side.

Types of Employment Contracts and Notice Periods

Let us now go over the different kinds of employment contracts present in the UAE, as these relate to notice period rules in the UAE. If you are working in the UAE, you will be employed under a fixed-term contract or unlimited contract.

Fixed-term Contracts

• New law dictates that all employment contracts in the UAE will be fixed-term subject to a maximum length of 3 years.
• Contracts can be extended only after agreement by both parties
• If any party wants to terminate the contract before the expiry date, a notice period will apply 

Unlimited Contracts

• New labor laws dictate that unlimited contracts must be phased out
• However, older unlimited contracts must be adjusted to be in line with the new laws
• If that is the case, a notice period still applies despite the law’s purpose of standardizing employment practices, including notice periods, across all types of contracts

Notice Period Duration

If you are an employee in the UAE who wants to resign from your position or terminate your contract, you need to give your employer at least 30 days of notice, according to the labor law. The same applies to employers who wish to let someone go. The maximum notice period stands at 90 days. Notice periods pertaining to company specific requirements must fall within this 30 to 90 day range and must be mentioned in the employment contract. 

The key considerations for notice period duration are listed below:

• Less than 30 days: Usually not entertained unless specific conditions apply such a probationary period etc
• 30 to 90 days: Most employees will come under this range. This will depend on their length of service, job role, and the terms.
• More than 90 days: A notice period exceeding 90 days is considered illegal under UAE law.

Resignation and Termination Procedures

If you, the employee, makes a decision to resign or if your employer decides to end your working relationship, the process must fall in line with the agreed notice period. Whoever initiates the termination is required to give the other party details of the same in writing, via resignation letter or termination notice.

The key steps involved in the resignation and termination process are as follows:

Written Notice: The employer or employee must hand over written notice of their desire to terminate the contract. Once this is handed in, the notice period begins, with the date of receipt by the other party being the official start of this notice period.  

Continuation of Work: As an employee entering the notice period, you will be required to work as normal and continue carrying out your duties/hitting your targets. Even if there is gross misconduct at the hands of the employee, the employer cannot terminate the contract until the notice period ends.

Payment of Compensation: If any party makes a decision to end the contract before the notice period ends, they will be liable to compensate the other party for the length of time of the unserved notice. This usually equals the salary the employee would have earned during the notice period.

Final Settlement: At the end of the notice period, employers must provide the employee with their final settlement, which includes any outstanding wages, end-of-service gratuity, and other entitlements.

Probation Period and Notice Period

Notice period laws that apply to employees who are still under probation at their new place of work differ slightly to permanent employees. The new law states that: 

If any employee wants to resign during the probationary period to join a new company inside the UAE, they must give the current employer 30 days notice. If they are leaving the UAE, then this period is shortened to 14 days. 

However, employers can terminate an employee who is still under probation without giving any notice period, as long as the reasons for termination are sound. Unsatisfactory performance could be one of them. 

Grounds for Immediate Termination Without Notice

The labor law in the UAE also makes provisions for contract termination without any notice under specific conditions.

Gross Misconduct by Employee: Violations such as forging documents, damaging company reputation, or endangering workplace safety gives the employer the right to terminate an employee without any notice.

Failure to Pay Salary: If the employer does not pay the employee’s salary for more than two consecutive months, the employee can terminate the contract without notice and claim compensation.

Abandonment of Work: If an employee absconds from work without reason for more than seven consecutive days or 20 non-consecutive days within a year, the employer can terminate the employee without notice.

Termination for Redundancy and Economic Reasons

The new laws have allowed employers to let employees go if they are redundant as long as the reasons are economic. This marks an effort on the UAE Government’s part to update its labor market to stay in line with global trends. If this is the case, employers must still adhere to the notice period rules.

If any form of change takes place within the organizational structure such as a restructuring effort or a merger, certain job roles may become redundant. In such a situation, notice period rules will still apply.

In the case where the company is struggling financially, or a macro environmental change such a global pandemic etc occurs, employees may be terminated as long as proper procedures are followed including notice periods and settlements.

End-of-Service Benefits and Notice Period

Once the notice period has been served and completed by the employee, it is the employee’s right to receive their end of service benefits.

If you have completed a full year of uninterrupted service to the company, then you are entitled to the end of service benefit. This benefit will be calculated based on your basic salary and your service duration.

If any salaries have not been paid, these must be cleared as well before the employee leaves the place of work permanently. In the case where any unused annual leave exists, employees are entitled to be paid for this as well.

Changes to the Law and Their Impact on Employers and Employees

If you are an employer, the changes to the law have brought about more control over employment contracts, giving you the freedom to terminate employees for economic reasons as long as the due procedures are followed. The changes also ensure that employers will not have to be burdened by long notice periods.

In the case of an employee, these new changes to the law mean that you will be protected from sudden terminations. It also ensures that you will receive the compensation that is due to you for your notice period. Shifting towards fixed term contracts also paves the way for higher levels of job security and increased clarity in regard to employment terms.

How can SetHub Help?

If you have any questions in regard to the updated notice period rules in the UAE, our team is on hand to assist you. Regardless of whether you are an employee or an employer who needs some clarity on the same, SetHub’s legal team is well versed in such affairs. Schedule a call with us now to put your concerns to rest!