New UAE Labor Law explained: What happens after an unlimited work contract is terminated?

If you are working in the UAE, you should be aware of all the legislative reforms that are taking place. This applies not only to employees, but also to business owners. This is because there could be certain situations that require you to know how to proceed, ensuring compliance and securing the safety of your business. Here is all you must know about the UAE Labor Law concerning contracts.

In this article, we will talk about UAE’s latest news about the Labor Law. You will know the conditions to include in your labor contract and the importance of it. On the other hand, we are going to see in detail the latest reforms related to employment contracts.

1. Why is are labor contracts important?
2. Why can both parties not dispense with the labor contract?
3. When can an employer dispense with an employee who has not terminated their contract?
4. What should employees know if they wish to resign from their job without terminating the treaty?
5. What are the new flexibilities in the UAE Labor Law for the termination of a pledge?
6. Other considerations
7. With The Talent Point, you can have access to endless opportunities

1. Why are labor contracts important?

It is common that when two or more people reach an agreement, they do it informally; or rather verbally. Such agreements are often problematic due to the lack of verification by one of the parties. Therefore, you must be careful when making verbal agreements; carelessness from one of the parties involved can lead to a bigger issue.

To solve this situation, we have contracts. These documents can become more critical depending on the field you are working in or on their intended purpose. For instance, when you are going to join a company, it is essential to sign a contract. This will give you security, as well as the company owner.

It is important to note that in labor contracts; the clauses to be agreed upon must be protected by the law. What this means is that the employer must be aware of the legislation. They must do this to avoid legal problems for both the company and the employee. The employee should be aware of this before signing their contract to prevent any misunderstandings.

Keep in mind that contracts are the basis for trust at work; therefore, everything must be handled correctly and transparently. In addition, you have to know that everything in the labor contract must be respected by all parties involved. If there is something that is not complied with, the affected party has the right to report it.

2. Why can both parties not dispense with the labor contract?

When one of the parties wants to unilaterally terminate the employment contract, there are many considerations to keep into account. If we are talking about the employer, they cannot dismiss an employee without providing a reason to justify the dismissal. If this happens, the notice may be considered arbitrary and the employee may have to be compensated.

According to the new UAE Labor Law, this can result in the employer paying up to three months’ wages for unfair dismissal. Although this law aims to protect employees from arbitrary dismissal, the company can unilaterally dismiss the employee if they fail to comply with all the terms of the contract.

Like the employer, the employee cannot terminate an employment contract without prior notice. Furthermore, they cannot leave the company without giving notice that they will no longer be working for the company. However, employees can also unilaterally terminate if the employer does not comply with the conditions set out in the contract.

The new Labor Law gives more flexibility to both parties to terminate the contract; even if the term is not fulfilled. However, both parties cannot arbitrarily terminate it without meeting certain conditions that justify dismissal or resignation.

3. When can an employer dispense with an employee who has not terminated their contract?

It is common that, at a given time, a company owner wants to dismiss an employee. It can be for different reasons, now what you need to know is which ones of them are legal and valid.

3.1 Presentation of false documents

You should know that before entering any job, you are asked for certain documents. For instance, if you are a foreigner, these can go from visa, to a health card, among others. This will vary from company to company. Now, an employer can dismiss an employee if they find out at the time of hiring that the candidate provided false documents. 

3.2 Not fulfilling duties

When you sign your employment contract, one of the first things established in it are your duties in the company. These must be fulfilled. If there are failures in this item, according to the update in the UAE Labor Law; the employer can terminate the employment contract of an employee.

3.3 Going to work intoxicated or with a bad appearance

When you have a job in a company that requires having a good presentation, you should maintain a good appearance. For instance, you must dress appropriately and look good. At the same time, you must be completely sober. If your manager finds you intoxicated or under the influence, they may terminate your employment.

3.4 Absences 

It is okay for you to be absent on a specific day. But, when this happens, you have to comply with certain rules that vary from company to company. For instance, you must give prior notice of the absence or; if it is a medical appointment, you must bring proof of absence. Now, you should know that the update in the UAE Labor Law; states that if you miss more than 7 consecutive days and 20 non-consecutive days without justification; your contract can be terminated.

3.5 Breach of non-disclosure agreements

Non-disclosure clauses are often included in employment contracts. This means that there is business information that cannot be disclosed to outsiders. Therefore, if your employer discovers that you are committing this offense, they will be able to terminate your employment contract.

3.6 Others 

In addition to all the offenses mentioned above, there are additional faults that you should be aware of. For example, having committed verbal or physical aggression against a co-worker is a reason for terminating a contract. According to the update of the UAE Labor Law; an employee can also be dismissed if they do not comply with the employer’s instructions, or commits any inappropriate activity, or poor behavior at work.

4. What should employees know if they wish to resign from their job without terminating the treaty?

Often, it is not only employers who need to terminate the employment of some employees; it also happens that employees want to terminate their employment contract. Therefore, in this segment, you will see certain things you should know before you quit your job; following the new updates in the UAE Labor Law.

• If you are on a probationary period and want to leave the UAE, you must give 14 days’ notice.
• Now, if you are on a probationary period, and you have another job offer at the time; you must give one month’s notice to the company.
• If you are being verbally or physically abused by your employer; you can terminate your employment contract before the end of the term.
• If the employer does not comply with any of the employment agreement clauses, you can resign from the job before the established period.
• However, if they impose an obligation on you that is not included in the contract, you are free to resign.

5. What are the new flexibilities in UAE Labor Law for the termination of a pledge?

Over time, it has become essential for the government to make changes in the labor laws. Recently, an update was made to the UAE Labor Law, which makes the termination of labor contracts more flexible. This includes several items to take into account.

A new law has been created to allow the termination of a labor contract before the end of its term. Of course, certain conditions have to be met. The first is that an employer can terminate an employee; if they have given more than two warnings for misconduct.

In addition, the duration of the labor contract was also taken into account. From now on, the term of a contract should be more flexible. This will also depend on the agreement reached with the future employee. In addition, the labor clauses are required to be more flexible and according to each situation.

The government of the UAE is establishing this new law for a very key purpose. That is, they want to provide a comfortable working situation for all employees; in turn for the company owners. Consequently, they will attract more people from all over the world to work in this country. Because they are offered good working conditions and respect for their rights.

6. Other considerations

Based on the above, you should already have an idea of how to handle this situation. However, here are a few tips from The Talent Point to help you learn more about the new Labor Law in the UAE:

6.1 The employer cannot dismiss you without prior notice

Although it may seem repetitive, it is important to consider it at all times. The employer cannot dismiss the employee without notice and justification. If this happens, the employer may be obliged to pay up to three months’ salary to the employee concerned. However, if the employee gives reasons for their dismissal, the employer does not have to pay the employee anything.

6.2 There are minimum notice periods

There is a minimum period of 30 days to give notice to the employee. However, with the new law, there is now a maximum period of 90 days, giving sufficient time to resolve any issues.

6.3 The company must be impartial when issuing the experience certificate

The company is required to make a certificate of experience impartial. This is to avoid the company writing a document that will prejudice the employee’s future options. It should be noted the importance of this certificate for the employer to be able to get another job.

6.4 Abuse is prohibited for both employers and employees

It is unacceptable for both parties to abuse others, regardless of the reason, the type of abuse will be punished. If we refer to employer abuse, we can deal with emotional and physical abuse alike. There can also be harassment of the employee, which will be intolerable in the workplace.

Similarly, if this behavior is seen in the employee whether it is against managers or colleagues it will be punished. Therefore, you should always be aware of these situations to avoid such misconduct. In addition, this type of attitude can lead to the immediate dismissal of the person involved.

6.5 The UAE Labor Law aims to help both parties

The new Labor Law aims to benefit both parties when they want to terminate their contract. This is to ensure better labor relations between employers and employees. It also seeks to ensure that both parties are not affected if this happens. This makes the working environment attractive to people from all over the world.

7. With The Talent Point, you can have access to endless opportunities

Now that you have gained all this essential knowledge about the UAE Labor Law and labor contracts; you can start your job search. You must keep this in mind when you are going to sign any agreement. Be clear about your duties and the things you cannot allow.

If you need support in your job search, you can always visit us on The Talent Point. Our platform aims to help both employers and candidates find what they are looking for. For this reason, we have become one of the favorite job search platform in the UAE.

Would you like to reach out to us to find out more? Share with us any concerns you may have by writing us an email at [email protected]. In addition, you can call us as many times as you need! Do it now at +971 43 316 688. We are always ready to assist you.