Termination of Employment in the UAE (2026): Legal Requirements and Practical Considerations for Employers

Learn the key legal requirements for employment termination in the UAE in 2026, including notice periods, end-of-service benefits, final payments.

The termination of an employment relationship in the United Arab Emirates requires careful planning. Employers must review the contractual basis for the termination, comply with the applicable notice requirements, calculate the employee’s final entitlements accurately, and complete the relevant administrative procedures.

The legal framework is particularly important for businesses managing restructuring exercises, performance-related dismissals, workforce reductions, or the departure of expatriate employees. Errors in the termination process may result in labour disputes, additional compensation claims, delays in cancelling work permits, and reputational risks.

For most private-sector employers, employment relationships are governed by Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Employment Relationships, as amended. However, companies operating in certain financial free zones, including the Dubai International Financial Centre and Abu Dhabi Global Market, are subject to separate employment regulations. Businesses should therefore identify the applicable jurisdiction before proceeding with a termination.

See also: Why Invest in UAE

When can an employment contract be terminated in the UAE?

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Under the UAE Labour Law, an employment contract may end in several circumstances. These include a written agreement between the employer and the employee, the expiry of the agreed contractual term, or the decision of either party to terminate the relationship in accordance with the applicable notice requirements.

A contract may also end because of the death or permanent incapacity of the employee, the permanent closure of the establishment, the insolvency or bankruptcy of the employer, or economic or exceptional circumstances that prevent the continuation of the business, subject to the conditions established under UAE law.

In practice, the most common form of termination occurs when an employer or employee ends the contract for a legitimate reason by providing written notice. The employer does not need to demonstrate serious misconduct in order to terminate an ordinary employment relationship, but it must comply with the contractual and statutory requirements and ensure that the decision is not retaliatory or otherwise unlawful.

Notice periods for terminating employment

The notice period agreed in the employment contract must be no shorter than 30 days and no longer than 90 days. The contract remains valid during this period, and the employee is entitled to receive their full wage based on the most recent wage paid.

The employer may require the employee to continue working during the notice period. Alternatively, the parties may agree to waive or shorten the working notice period while preserving the employee’s financial rights. Where either party fails to comply with the notice requirements, the other party may be entitled to compensation corresponding to the full notice period or the remaining portion of that period.

When an employer terminates the contract, the employee is also entitled to take one unpaid working day per week during the notice period to search for another position, provided that the employee gives the employer at least three days’ notice before taking the day off.

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Different rules apply during probation. An employer seeking to terminate an employee during the probationary period must provide at least 14 days’ written notice. Employees leaving during probation are also subject to specific notice requirements, which vary depending on whether they intend to leave the UAE or move to another employer in the country.

Dismissal without notice

Dismissal without notice is permitted only in specific cases, including forged documents, serious misconduct, repeated failure to perform duties, safety breaches, unauthorised absence, assault, disclosure of confidential information, or abuse of position.

Employers must conduct a written investigation and issue a written, reasoned decision. Supporting records, including warnings and attendance records, should be retained in case of a dispute.

Unlawful termination and employee complaints

A termination may be unlawful if an employee is dismissed for filing a serious complaint with the Ministry of Human Resources and Emiratisation or bringing a valid legal claim against the employer.

A court may award compensation of up to three months’ wages, in addition to notice-period payments and end-of-service benefits. Employers should document the business or performance-related reasons for any termination, particularly where the employee has recently filed a complaint or claim.

Calculating end-of-service benefits

Foreign full-time employees who have completed at least one year of continuous service are generally entitled to an end-of-service gratuity when their employment ends.

The gratuity is calculated using the employee’s basic wage rather than their total remuneration package. The standard calculation is:

• 21 days of basic wage for each year of service during the first five years; and
• 30 days of basic wage for each additional year of service after the first five years.

Employees who have completed at least one year of service are entitled to a proportionate payment for any additional partial year worked. The total end-of-service benefit may not exceed two years of the employee’s wage.

Employers should distinguish carefully between the employee’s basic wage and additional allowances or benefits. Housing allowances, transport allowances, bonuses, and other benefits may form part of the employee’s overall compensation package, but the statutory gratuity calculation is based on the basic wage as defined under the employment contract and applicable law.

Different rules apply to UAE nationals, whose end-of-service entitlements are generally addressed through the relevant pension and social-security legislation. Employers should also assess whether an approved alternative end-of-service benefits scheme applies to the employee.

Final payments and administrative obligations

Employers must settle outstanding payments within 14 days from the end of the contract. These may include unpaid salary, accrued leave, notice-period compensation, end-of-service gratuity, and other contractual entitlements.

Employers should document the final calculation and any lawful deductions. Where requested, they must provide a free experience certificate.

For expatriate employees, employers must also complete work-permit and visa-cancellation procedures and may need to cover repatriation costs, unless an exception applies.

Managing redundancies and workforce restructuring

A restructuring exercise requires more than the issuance of termination letters. Employers should document the commercial basis for the changes, identify the roles affected, and apply objective criteria consistently.

While UAE law allows an employment relationship to be terminated for a legitimate reason with notice, employers should avoid decisions that may appear discriminatory, retaliatory, or arbitrary. Selection criteria should be based on genuine operational requirements, such as the elimination of a position, a reduction in business activity, organisational consolidation, or changes to the company’s operating model.

Businesses should also review whether the employee is on protected leave, whether the notice period can begin immediately, and whether additional contractual benefits apply. For example, if a notice of termination is issued while an employee is on leave, the notice period will generally begin on the day after the employee is scheduled to return unless the parties agree otherwise.

For larger restructuring exercises, employers may also need a coordinated plan covering internal communications, access to company systems, the return of equipment, client handovers, confidentiality obligations, and visa-cancellation procedures.

Data security and confidential information

The departure of an employee creates legal and operational risks beyond the final payroll calculation. Companies should ensure that access to email accounts, internal databases, cloud platforms, financial systems, and client information is removed at the appropriate time.

Employers should maintain a documented offboarding process covering the return of laptops, mobile phones, access cards, records, and confidential documents. Employees should be reminded of any continuing confidentiality obligations and, where relevant, any valid post-employment restrictive covenants.

Non-compete clauses may be included where an employee’s role gives them access to clients or business secrets. However, the restriction must be limited in terms of time, geographic scope, and type of activity to the extent necessary to protect the employer’s legitimate business interests. Under the federal framework, the non-compete period may not exceed two years after the expiry of the employment contract.

Mainland companies, free zones, DIFC, and ADGM

Businesses should avoid assuming that a single termination procedure applies across every UAE jurisdiction.

Most private-sector employers must comply with the federal labour framework and the procedures administered by the Ministry of Human Resources and Emiratisation. However, employers operating in the DIFC are subject to the DIFC employment law regime, while businesses in ADGM must comply with the ADGM Employment Regulations.

These jurisdictions have their own requirements relating to notice periods, end-of-service payments, written statements, employee records, work permits, and dispute resolution. Companies with employees working across multiple entities or locations should review each employment relationship separately.

Practical steps for employers

Before terminating an employee, employers should:

• Review the contract and applicable jurisdiction;
• Document the reason for termination;
• Conduct an investigation where misconduct is involved;
• Prepare the written notice and confirm the notice period;
• Calculate outstanding salary, leave, gratuity, and other entitlements;
• Arrange the return of company property and removal of system access;
• Complete work-permit and immigration procedures;
• Issue an experience certificate where requested; and
• Retain records in case of a dispute.

For restructuring-related terminations, employers should also document the commercial rationale and selection criteria.

Conclusion

Terminating an employment relationship in the UAE requires attention to both legal compliance and implementation. The correct approach depends on the employee’s contract, the reason for termination, the length of service, the employee’s immigration status, and the jurisdiction in which the employer operates.

A clear process, supported by written records and accurate calculations, can reduce the risk of disputes while ensuring that the employee’s statutory and contractual rights are respected. Companies managing complex dismissals, senior departures, or wider restructuring exercises should obtain professional advice before taking action.

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