Guideline for Employees - Part I: Limited Contract Resignation In UAE

Guideline For Employees

Part I

Labour & Employment Part: Limited Contract Resignation In UAE

Are you looking to land a job in the UAE? Suppose you successfully secure a position and are almost settled in, but life takes an unexpected turn, and you need to change jobs. Can you resign? What does UAE Labour Law state?

Understanding the ins and outs of limited contract resignation allows employees to control their career journey without getting entangled in issues. Even if you are on the management side, you must be aware of labour and employment regulations regarding limited contract resignation in the UAE, as many employees resign without completing their tenure.

This blog clears most of your doubts regarding labour and employment limited contract resignation following the UAE Federal Decree-Law No. 33/2021 On Regulation of Labour Relations (hereinafter referred to as “UAE Labour Law” or “Employment Law”).

It is important to note that the provisions of this law, and therefore this guideline, apply only to establishments, employers, and workers within the private sector in the UAE. Employees of federal and local government entities, members of the armed forces, police, security personnel, domestic workers, and any other workers under independent jurisdictions such as Abu Dhabi Global Market (“ADGM”) or Dubai International Financial Centre (“DIFC”) are not subject to this regulation.

What's A Limited Contract In The UAE?

A limited contract is an employment agreement valid for a specific period, not exceeding three years. The contract starts and ends on the dates stated within it. However, it can be renewed by the employer or implicitly extended if both parties continue to operate under its terms after the original period ends without an explicit agreement.

Previously, both limited and unlimited contracts were allowed. However, with the amendment of Federal Decree-Law No. 14/2022 to the UAE Labour Law now requires the private sector to hire employees only under limited contracts (with exceptions in other UAE jurisdictions such as DIFC Law No. 2/2019, where contracts can have an indefinite duration).

Legal Procedure For Resignation

Notice Period Allowance

If you plan to resign, you must give a notice period before officially leaving your job. During this time, you will continue working and receiving your regular salary. The notice period can vary depending on whether you are in the probation period, but you should first check the notice period stated in your contract. The timelines are as follows:

• During Probation period:
• Employer: at least 14 days notice.
• Employee: at least 1-month notice.
• After the probation period: Employer and employee must give a 30 to 90 days notice, as per contract terms.

The notice period is the time you or your employer need to give each other before ending the agreement. This period allows both sides to prepare for the end of the agreement.

Looking for a Job During the Notice Period

If your employer accepts your resignation, you have the right to look for a new job. You can take one day off per week during your notice period to job hunt, provided you inform your employer three days in advance.

Termination During Leave

If an employee is on leave and the employer decides to terminate the contract, the notice period will begin only after the employee returns from leave. This can be adjusted if both parties agree otherwise. If either party wishes to terminate the contract while the employee is on leave, the notice period will not start until the day after the employee is scheduled to return, unless both parties agree to a different arrangement.

Resignation Without Serving the Notice Period

An employee can resign without notice in certain situations, such as the employer breaching contractual obligations, assault, violence, harassment, serious workplace danger, or assigning work fundamentally different from what was agreed upon without the employee's consent.

Additionally, there are certain situations where an employer can dismiss an employee without notice, such as impersonation, submitting forged documents, causing serious material loss, repeated failure to perform basic duties, disclosing work secrets, intoxication during working hours, assault, and unauthorized absence.

Employee Termination During the Probationary Period

If an employee wishes to transfer to another company during the probation period, they must provide at least one month's written notice. The new employer must compensate the original employer for recruitment costs unless agreed otherwise.

Employer's Right to Terminate a Contract

An employer can terminate an employee's contract under legitimate circumstances, and it will only be considered illegal if the termination is due to the employee filing a serious complaint with the Ministry or a lawsuit against the employer.

Compensation For Termination

National workers are entitled to end-of-service gratuity as per pension and social security laws. Foreign workers are entitled to end-of-service gratuity based on their basic salary, which includes 21 days' pay for each of the first five years and 30 days' pay for each year after the first five years. Proportionate gratuity is granted for partial years worked, provided one year of continuous service is completed.

Final Words

As an employee in the UAE, knowing your rights and the steps involved in resigning allows you to make informed decisions about your career. Employers, on the other hand, need to understand the procedures involved in managing resignations effectively while maintaining professionalism and mutual respect.

Whether you are considering a change after six months or beyond, or as an employer planning to terminate a limited contract, we hope this article has clarified what the UAE employment and labour law states.

FAQs

Can an employee resign after 6 months of a UAE-limited contract?

Yes, employees can resign after six months. The UAE labour law empowers employees to make career changes during and after this period.

What happens if the limited contract of an employee is terminated without notice?

During the probation period, the party terminating the contract without considering the notice period must pay compensation equal to the worker's remuneration for the notice period. After the notice period, the non-compliant party must pay compensation equal to the worker’s remuneration for the entire notice period.

Will an employee be responsible for visa charges if they resign in the UAE?

No, the employee's visa fees are usually the employer's obligation. It's unlawful for the employer to seek compensation for these fees, even if the employee resigns during the probationary period. The new employer must compensate the original employer for recruitment costs if the worker moves to another job during the probation period, unless agreed otherwise.

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