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Termination of employment in the UAE is governed by specific rules outlined in the UAE Labour Law (Federal Decree‑Law No. 33 of 2021).
Whether you are an employer or an employee, understanding these rules is important to avoid legal issues and ensure a smooth exit process. The law sets clear guidelines on notice periods, final settlements, valid reasons for termination, and more.
For organizations operating in the UAE, following the correct termination process is not just about compliance but it also protects your business from disputes and maintains a positive employer brand.
When you let go of an employee, you must ensure every step aligns with the law, from issuing notices to calculating end-of-service benefits.
At Yomly, we offer an automated payroll software that simplifies employee management, including compliant termination handling.
👉 You can book a free demo of Yomly to see how it works or continue reading to explore the full 2025 guidelines.
Legal Grounds for Termination (Article 42)
Under Article 42 of the UAE Labour Law, employment contracts can be terminated for several lawful reasons. Knowing these legal grounds is important for both employers and employees to avoid disputes and ensure a compliant exit process. Each of these situations comes with specific conditions that must be followed.
Here are the key legal grounds for termination as outlined in Article 42:
1. Contract expiry or non-renewal
A common reason for termination is the expiry of a fixed-term contract. If neither party chooses to renew the contract, the employment naturally ends on the agreed date. However, employers must still provide final settlements and other dues.
If the employee continues working after the end date without a new contract or renewal, the contract is considered extended by default, and notice may then be required to end the employment.
2. Mutual agreement in writing
Both employer and employee can agree to end the contract at any time, as long as the agreement is in writing. This provides a clean and legal way to part ways without the need for notice periods. It’s important to clearly document the terms of this mutual agreement, including any final payments, to avoid misunderstandings later.
3. Termination by either party with notice
An employer or employee may terminate the contract by giving a written notice as per the notice period mentioned in the contract, usually between 30 to 90 days.
During this notice period, the employee is expected to continue working unless both sides agree otherwise. Failure to serve the notice or pay compensation in lieu of notice can lead to legal claims.
4. Other situations
Employment can also be terminated in other legally accepted scenarios such as:
- Retirement of the employee
- Death of the employee or employer (if the contract is tied to the person)
- Permanent disability of the employee, supported by medical reports
- Business closure or bankruptcy of the employer
In each of these cases, documentation and clear communication are necessary to complete the process lawfully.
Notice Period Requirements (Article 43)
Article 43 of the UAE Labour Law outlines the conditions regarding notice periods for termination of employment.
The notice period ensures that both the employer and employee have ample time to adjust to the termination, whether it’s initiated by the employer or the employee. The notice period provides a legal structure to avoid sudden disruptions and guarantees that both parties can make necessary arrangements.
Understanding the correct way to handle notice periods is critical for compliance and maintaining healthy business practices.
Here are the key details:
1. Standard Notice Period
The notice period is typically defined in the employment contract, but the law sets minimum requirements if it is not specified. For most employees, the notice period should be at least 30 days, but this can be extended based on the contract terms.
In cases where the employee has been with the company for a long period, some contracts may specify a longer notice period. If a shorter notice period is agreed upon in the contract, it must not be less than 14 days.
2. Termination by the Employer
When an employer terminates an employee, they must provide a notice period unless the termination is based on justifiable reasons (such as serious misconduct).
If the employer does not comply with the notice period, they must compensate the employee for the unfulfilled period. This compensation should be equivalent to the salary the employee would have earned during the notice period. Failure to pay this compensation can lead to legal challenges from the employee.
3. Termination by the Employee
Employees who choose to resign also need to adhere to the notice period. The employee is expected to provide the employer with written notice, and failure to do so could lead to financial penalties, typically the amount equal to the notice period’s salary.
It is advisable that employees serve the full notice period to maintain good relations with the employer and receive their full final settlement. In some cases, an employer may waive the notice period requirement, allowing the employee to leave sooner.
4. Exemptions from Notice Period
In some cases, the notice period may not be applicable, such as when an employee is dismissed for serious misconduct. Under the UAE Labour Law, these include actions like theft, fraud, or insubordination.
If the employer can prove such misconduct, they may terminate the employee immediately without notice, and no severance pay is required. Likewise, if an employee has committed serious violations, they may also terminate their contract immediately without notice.
5. Mutual Agreement to Waive Notice Period
In some situations, both the employer and the employee may agree to waive the notice period, which means the employee can leave the job immediately or the employer can terminate without waiting for the usual notice.
This typically happens when both parties mutually agree on the exit terms and avoid further complications.
Employers and HR professionals should ensure they adhere to these regulations to safeguard both their interests and those of their employees. HR Platforms like Yomly can help in managing notice periods, automating notices, and keeping the process streamlined and compliant.
Update for 2026: No major change in minimum duration but the guidance around probation and notice variations is now more consistently applied by MOHRE and courts.
Also Check Out: Best HR Software For UAE Enterprises
End-of-Service Benefits & Final Settlement
In the UAE, end-of-service benefits are a legal entitlement for employees who complete at least one year of continuous service. These benefits are part of the final settlement and must be calculated accurately according to the guidelines in the UAE Labour Law.
Employers are responsible for ensuring timely and correct disbursement of all dues, including unused leave salary, gratuity, notice period pay (if applicable), and any other pending payments.
The gratuity amount in UAE is calculated based on the employee’s last basic salary and years of service. For example, an employee completing between 1 to 5 years is entitled to 21 days’ basic pay per year, while those serving more than 5 years are eligible for 30 days per year.
Employers must also settle all dues within 14 days from the termination date, as mandated by law. Using platforms like Yomly ensures that these calculations are done correctly and that the final settlement process is fully compliant and documented.
Offboarding Process & MOHRE Submission
A structured offboarding process is essential to ensure legal compliance and a smooth exit for the employee.
In the UAE, offboarding involves not just internal procedures like collecting company assets and conducting exit interviews but also fulfilling mandatory legal steps such as updating records with the Ministry of Human Resources and Emiratisation (MOHRE).
Employers are required to submit termination details to MOHRE within the legally allowed timeframe.
This includes:
- Cancelling the employee’s labour card and work permit
- Updating MOHRE systems with the reason and date of termination
- Settling all dues and issuing a service certificate if requested
Delays or errors in submission can lead to fines or legal complications. Using an HRMS like Yomly helps businesses manage the entire offboarding process, ensuring proper documentation, MOHRE integration, and compliance with UAE labour law.
👉 These provisions are still in force through 2026 and are regularly relied upon.
Another Important Update:
Starting 1 January 2026, the UAE raised the minimum private sector wage for Emirati employees to AED 6,000 per month.
This is not a termination rule per se, but impacts compliance and contractual salary obligations, relevant for employers calculating final dues and contracts.
Frequently Asked Questions
What are the legal grounds for termination under UAE Labour Law 2025?
Under Article 42 of the UAE Labour Law, employment can be terminated on several lawful grounds, including contract expiry or non-renewal, mutual agreement in writing, termination by either party with proper notice, retirement, permanent disability, or closure of the business. These grounds must be supported by proper documentation to avoid legal complications.
What is the minimum notice period for terminating an employee in the UAE?
The minimum notice period is 30 days, unless otherwise specified in the employment contract. Some contracts may allow up to 90 days, depending on the agreement between the employer and employee. Notice must always be given in writing and served properly to ensure compliance.
Can an employer terminate an employee without notice in the UAE?
Yes, but only under specific circumstances. If an employee commits serious misconduct such as fraud, theft, or repeated violation of company policies, the employer may terminate the contract without notice. However, the employer must have documented evidence and follow the legal process to justify such a decision.
What compensation is due to an employee after termination?
Employees are entitled to their final salary, payment for unused leave, end-of-service gratuity (if they’ve completed at least one year), and any other contractually agreed benefits. The final settlement must be paid within 14 days from the termination date to remain compliant with the law.
Can an employee resign without notice in the UAE?
Only in exceptional cases. If the employer has breached contract terms, failed to pay salaries, or exposed the employee to unsafe working conditions, the employee may resign without notice. In regular situations, the employee must serve the notice period as per the contract or pay compensation in lieu.
How can Yomly help automate the termination and final settlement process?
Yomly’s HR and payroll platform streamlines the termination process by automating notice period tracking, end-of-service benefit calculations, and MOHRE submissions. It ensures accuracy, legal compliance, and faster settlements reducing the risk of human error and delays. You can book a free demo to see it in action.
