UAE termination requires written notice of 30–90 days (or salary in lieu). Arbitrary dismissal without valid reason triggers 3 months’ gross salary compensation in addition to all entitlements. Final settlement — gratuity, leave balance, notice pay — must be paid within 14 days of the last working day. The employer cancels the visa within 30 days.
Lawful grounds for termination in UAE
UAE Labour Law distinguishes between termination with notice (for any lawful reason) and termination without notice (for specific gross misconduct). Both require documentation.
- Termination with notice: The employer gives written notice (minimum 30 days, maximum 90 days as per contract). No specific reason is legally required for a limited-term contract not to be renewed — but if the employee disputes an arbitrary reason, the employer must prove the business decision was genuine.
- Termination without notice (gross misconduct): Article 44 of UAE Labour Law lists specific grounds: fraud or breach of trust, intoxication at work, assault on the employer or colleagues, disclosure of business secrets, court-convicted serious crimes, unauthorised absence for more than 7 consecutive days.
Even with a valid business reason, undocumented terminations regularly result in arbitrary dismissal claims in UAE labour courts. Before serving notice: document the performance issue, warning letters, and HR meetings. For misconduct dismissal: conduct a formal investigation, record findings, and issue a written dismissal letter citing the specific Article 44 ground.
Arbitrary dismissal — the 3-month compensation rule
An employee who is dismissed without a valid reason — or for a reason related to protected characteristics (pregnancy, illness, union activity, religion) — is entitled to arbitrary dismissal compensation of up to 3 months’ gross salary, in addition to all end-of-service entitlements (gratuity, notice pay, leave cash-out).
The labour court awards compensation based on the degree of arbitrariness — a sudden dismissal of a 10-year employee with no performance history for alleged poor performance is more arbitrary (higher award) than a redundancy with documented financial distress. Courts have discretion in the final amount up to the 3-month cap.
Final settlement — what to pay and when
The final salary payment (including unpaid leave and gratuity — where paid through payroll) must go through WPS. Some employers pay gratuity as a separate bank transfer, which is acceptable as long as the regular salary component goes via WPS. A cash final settlement violates WPS rules.
| Component | Calculation | Deadline |
|---|---|---|
| Notice pay (if not worked) | Basic salary × notice period in months | Last working day or notice end |
| End-of-service gratuity | 21 days/year (yr 1–5) + 30 days/year (yr 6+) × basic | Within 14 days |
| Accrued annual leave | Remaining leave days × basic daily rate | Within 14 days |
| Outstanding salary | Any unpaid salary up to termination date | Last WPS cycle |
| Unpaid expenses/commissions | Per contract terms | Within 14 days |
Visa cancellation after termination
After termination, the employer must cancel the employee’s UAE residence visa and work permit within 30 days. Failure to cancel: the employer remains liable for the employee’s residency obligations until cancellation. The employee then has 30 days from visa cancellation to leave the UAE or change visa status (find a new sponsor).
If the employee refuses to return the passport or labour card for cancellation, the employer should report this to MOHRE and Immigration — do not delay the cancellation process waiting for the employee.
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Frequently asked questions
What is the notice period for UAE employment termination?+
Minimum 30 days, maximum 90 days — as specified in the employment contract. The employer can pay salary in lieu of notice instead of requiring the employee to work the notice period. Notice must be given in writing.
What is arbitrary dismissal in UAE?+
Dismissal without a valid reason, or dismissal for a protected reason (pregnancy, illness, filing an MOHRE complaint). Compensation: up to 3 months’ gross salary in addition to all end-of-service entitlements (gratuity, leave cash-out, notice pay).
When must final settlement be paid in UAE?+
Within 14 days of the last working day. Final settlement includes gratuity, accrued annual leave cash-out, notice pay (if not worked), and any unpaid salary or commissions. Failure: AED 5,000 per month penalty from MOHRE.
Can UAE employer terminate without notice?+
Only for specific gross misconduct grounds under Article 44 of UAE Labour Law: fraud, intoxication at work, assault, serious security breach, or unauthorised absence for 7+ consecutive days. Even then, a formal investigation and documented dismissal letter are required.
What happens to the employee's UAE visa after termination?+
The employer must cancel the work permit and UAE residence visa within 30 days of termination. The employee then has 30 days from visa cancellation to depart the UAE or transfer to a new sponsor.
Must gratuity be paid via WPS in UAE?+
The final salary component must go through WPS. Gratuity can be paid as a separate bank transfer, but it must be paid within 14 days of the last working day. Some employers include gratuity in the final WPS payroll run for a clean single payment.