Terminating employment fairly in the United Arab Emirates
Reviewed by Mellow Editorial Team, HR & payroll content team
Terminating employment fairly in the UAE means following the process set out in Federal Decree-Law No. 33/2021 — giving proper notice, paying all final entitlements, and documenting your reasons. Get those steps right and you significantly reduce the risk of a labour complaint or court claim.
This article is general information only, not legal advice. For your specific situation, consult a qualified UAE employment lawyer or licensed HR consultant.
Understand the grounds for termination
UAE labour law recognises two broad categories: termination with notice and termination for cause (summary dismissal).
Termination with notice applies when you are ending a contract for a legitimate business reason — restructuring, redundancy, performance issues that do not rise to gross misconduct, or the natural end of a fixed-term contract that you choose not to renew.
Summary dismissal without notice is permitted only in specific circumstances listed in the law, such as serious misconduct, disclosure of confidential information, or an employee being found intoxicated or under the influence of drugs during working hours. This list is exhaustive. Using summary dismissal outside these grounds exposes you to an arbitrary dismissal claim.
Arbitrary dismissal — where an employee is terminated without a valid reason or proper process — entitles the employee to compensation of up to three months' remuneration, in addition to all other end-of-service entitlements. That is a material financial and reputational risk.
Notice periods and how they work
For contracts governed by Federal Decree-Law No. 33/2021, the minimum statutory notice period is 30 days. Employment contracts or company policies may provide for longer periods, and that longer period will apply.
Notice should be given in writing. During the notice period, the employee continues to work (and be paid) unless you agree otherwise. You can pay in lieu of notice, but you must do so — you cannot simply ask someone to leave immediately and then refuse to pay the notice period.
Fixed-term contracts that are terminated early by the employer before expiry carry an additional obligation: you may be liable to compensate the employee for the remaining term, up to a maximum of three months' remuneration, depending on the circumstances.
Calculating final entitlements
This is where many employers make mistakes. A terminating employee is entitled to receive all of the following before or on their last working day (or very shortly after):
Accrued but unpaid salary — including any commission or allowances that formed part of the contractual package.
Accrued annual leave pay — employees are entitled to 30 calendar days of leave per year after completing one year of service. Any leave earned but not taken must be paid out on termination.
End-of-service gratuity — expatriate employees accrue gratuity based on their basic wage: 21 days' basic wage for each completed year of service in the first five years, and 30 days' basic wage for each year beyond that. The total gratuity is capped at two years' total basic wage. Gratuity is calculated on years completed; partial years are paid on a pro-rata basis. Employees who resign before completing one year receive no gratuity; those who resign between one and three years receive one-third; between three and five years, two-thirds; and after five years, the full amount applies.
UAE and GCC nationals are enrolled in the GPSSA pension scheme rather than accruing gratuity; employer and employee contributions are made throughout employment, so the gratuity calculation above does not apply to them.
Return air ticket — if the employment contract includes a repatriation obligation, this must be honoured.
Failure to settle final entitlements on time can lead to a labour complaint and, ultimately, a penalty. Delays are taken seriously by the Ministry of Human Resources and Emiratisation (MoHRE).
The documentation you need
A clean paper trail protects you if a dispute arises. At minimum, you should have:
- A written termination letter stating the effective date and reason (in general terms if necessary).
- Evidence of any performance management, warnings, or disciplinary steps taken beforehand — relevant if the termination relates to conduct or performance.
- A signed final settlement acknowledgement confirming the amounts paid and that the employee has received all entitlements.
- Cancellation of the employee's work permit and visa within the statutory timeframe after the last day of employment.
WPS records will show salary payment history, which is useful if a complaint is ever filed.
Practical steps to reduce dispute risk
Conduct a brief offboarding meeting. Explain the situation calmly and clearly. Where possible, allow the employee to ask questions about their entitlements.
Calculate entitlements carefully before the final meeting — errors discovered later create distrust and complaints. If the termination is redundancy-related, be consistent: terminating one person from a team of similar roles while retaining others without a clear rationale is a common trigger for complaints.
If the employee is on a probationary period, shorter notice rules apply under the law, but you still need a written notice and cannot simply stop paying someone mid-probation.
For complex cases — terminating a senior employee, managing a redundancy programme, or handling a dismissal following a disciplinary process — taking advice before acting is almost always cheaper than dealing with the consequences of getting it wrong.
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