New Labour Rules: How employee services can be terminated in UAE

The three new labour rules, effective from New Year, are in line with the Constitution and International Labour Standards, said Saqr Ghobash, Minister of Labour and Chairman of National Qualifications Authority (NQA).

How employee services can be terminated:

In a fixed-term contract…

The second rule involves termination of employees. There are six instances when a working relationship can end in a fixed-term contract. [Fixed-term contracts are those not exceeding two years and which are approved by the Ministry].

1. In instances when the contract expires automatically at the end of term as agreed upon by the two parties, and is not renewed, the service stands terminated.

2. Services can be terminated in agreement by both parties (employer and employee) during the course of its term.

3. Similarly, the decision by the employer alone or the employee alone to terminate the contract during the time of renewal can also end one’s service. The terminating party bears any legal consequences.

4. However, in this case, the one taking the decision is obliged to let the other know of the intention in a written notice before terminating the contract.

a. Either of them should inform the other with a notice period of not less than one month and not exceeding three months.

b. In the event, the parties do not agree to a mutual notice period, then the notice period should be taken as three months and money be paid in exchange for the termination of the employment relationship, as agreed by the parties.

c. In which case, the amount should not be more than three months’ salary if the parties had not agreed on the amount of total compensation previously.

5. The service can stand cancelled if the employer alone decides or the employee alone decides to terminate the contract without adhering to legal procedures referred to above.

6. An employee’s service can be terminated if the employee commits an offence as per Article 120 of the Labour Relations Regulatory Act, such as assault on employer, etc.

In case of unlimited [non-fixed term] contracts…

If it’s a non-fixed term contract between the employer and employee, then the employment relationship between the employer and employee stands terminated in four instances…

1. If both the parties mutually agree to cancel the contract.

2. Services can stand cancelled if one of the parties desires to terminate the contract after notifying the other party but must continue to honour contractual obligations for the duration of notice period. The notice period in such case should not be less than one month and not more than three months.

3. Similarly, if one party (employer or employee alone) decides to terminate the contract without complying with legal proceedings as mentioned above and without the knowledge of the other, then the service can stand terminated and the terminating party bears consequences.

4. Also, a working relationship with an employer stands cancelled if the employee commits an offence as per Article 120 of the Labour Relations Regulatory Act, such as physical assault on employer, etc.