Termination of Contract under New Labour Law Rules (2016)

Termination of Limited Contract or Unlimited Contract under New Labor Law Rules

The 2nd Ministerial Resolution 765 released in September 2015, speaks about Termination of Employment Relations under Limited Contract and Unlimited Contract.
The Resolution provides clear scenarios as to when can an Employment Contract be terminated. It provides rights of the employee and employer. These terms are effective as of January 1, 2016.

Extract from MOL Decree 765 of 2015:

Minister of Labour’s decree (765) of 2015 on Rules and Conditions for the Termination of Employment Relations.

The Minister of Labour:

Upon consulting Federal Law (1) of 1972 on the mandates of ministries and the powers granted to ministers; and of Federal Law (8) of 1980 and its amendments governing labour relations.

Decrees:
Article (1)

An employment relation between employer and worker may be terminated as follows:

I. In the case of fixed-term contracts (approved by the Ministry for a term of no more than two years), an employment relation is terminated if any of the following instances occurs:

1. The term of the contract expires and the contract is not renewed.

2. Employer and worker mutually consent to terminate the contract during the course of its term.
3. Either party (employer or worker) acts unilaterally to terminate the contract and complies with the legal steps that are described in clause (4) of this article. The terminating party bears any legal consequences of early termination.

4. Either party (employer or worker) acts unilaterally to terminate a renewed term contract, whether renewal has occurred before or after this decree enters into effect, provided the terminating party complies with the following legal steps:

a. Notify the other party in writing of its intent to terminate the contract in accordance with the notice period to be agreed to by the two parties, not to be less than one month and not to exceed three months. If renewal occurred before this decree enters into effect and the parties had not agreed to a notice period, this notice period shall be three months.

b. Continue to honour his/her contractual obligations for the duration of the notice period.

c. Indemnify the other party to the level that was agreed to by both parties, not to exceed the equivalent of three months of gross wages. If renewal occurred before this decree enters into effect and the parties had not agreed to the amount of indemnification, this indemnification shall be the equivalent of three months of gross wages.

5. Either party (employer or worker) acts unilaterally to terminate the contract without complying with the legal steps that are described in clause (4) of this article, and for no reason of non-compliance by the other party; in this case the terminating party bears any legal consequences of early termination.

6. The Employer acts to terminate the contract of a worker who commits any of the violations that are described in Article (120) of the Federal Labour Law.

II. In the case of unlimited (not term-bound) contracts, an employment relation is terminated if any of the following instances occurs:

1. The two parties consent to termination.

2. One party acts, at any time, to terminate the contract subject to notifying the other party and continuing to honor contractual obligations for the duration of the notice period, which cannot be less than one month and cannot exceed three months.

3. One party (employer or worker) acts unilaterally to terminate the contract, without complying with the legal conditions described in (2) above and without reason of non-compliance by the other party; in this case the terminating party bears any legal consequences of early termination.

4. The Employer acts to terminate the contract of a worker who commits any of the violations that are described in Article (120) of the Federal Labour Law.

In all instances of termination described in this Artile (1), either Employer or Worker may refer to the judicial system to seek indemnification or recover other rights under the Federal Labour Law and its implementing decrees.

Article (2)

An employment relation is considered to have de facto ended if any of the following instances occurs:

1. It is duly established that the employer has failed to meet contractual or legal obligations to the worker (as in, but not limited to, the non-payment of wages for a period exceeding 60 days)

2. The worker has filed a court complaint against an employer who failed to secure employment of the worker as a result of the shutting down of the employer’s business, in which case a report by Labour Inspection attesting to the fact that the business has been inactive for a period exceeding two months must be obtained and the worker must have reported to the Ministry during this period.

3. A labour complaint is referred to the court by the Ministry and a final ruling is obtained in favour of the worker stating that the worker is entitled to no less than two-month wages or to indemnification for arbitrary firing or early termination of a fixed-term contract, or any other benefits denied to him by the employer for no lawful reason or including the end-of-service benefit.

Article (3)

An employment relation is deemed to have ended without due process when:

1. The employer terminates the employment relation without complying with legally mandated procedures;

2. The worker employer terminates the employment relation without complying with legally mandated procedures;

In which cases the wronged party may initiate legal action to seek indemnification or the recovery of other rights as stipulated by the aforementioned Law governing labour relations.

Article (4)

Any and all provisions of previous ministerial decrees that are contrary to, or inconsistent with the provisions of this present decree are hereby rendered null and void.

Article (5)

This Decree shall be published in the Official Gazette and become effective on January 1, 2016.

By Saqr Ghobash, Minister of Labour
Issued in Abu Dhabi on September 27, 2015

—————————————–
Explanations:

Article 1

Part 1:
Termination under Limited Contract:

The contract is terminated in case it falls under the following possibilities –

-The contract is terminated automatically at the end of the 2 year period and is not renewed.
-The contract can be terminated if both employee and employer agree to terminate.
-Either employee or employer terminates the contract by himself will need to adhere to legal steps as in next point.
-Either employee or employer by himself terminates the employment contract, will need to adhere to following legal steps:
*The terminating party needs to inform the other party about the intent to terminate the contract in writing and serve a minimum notice period of One Month and maximum of Three Months. If the renewal happened before January 1, 2016 and if in case the notice period duration is not mentioned in the contract, the notice period will be 3 months.
*The terminating party will continue their contractual obligations. For employers it means that they should continue paying salary and other benefits. For employees, it means that they should continue their work as it is.
*The terminating party will compensate the other party with 3 month gross wages. IF the renewal happened before 1st January 2016, and compensation was not decided by both parties, 3 month gross salary should be paid as compensation by the terminating party.
*If either employee or employer do not comply with the Point 4 or for no reason of non-compliance by other party, the party which terminates the contract will face legal consequences.
If the employer terminates the employee under Article 120 of the Labor Law.

Part 2:
Termination under Unlimited Contract:

The unlimited contract is terminated in case it falls under the following conditions:

-If both parties agree to Termination;
-Either employee or employer decides to terminate the contract while notifying the other party in writing and continues to honor the contractual duties during the notice period which is minimum 1 month or maximum 3 months;
-If either employee or employer do not comply with the Point 2 or for no reason of non-complaince by other party, the party which terminates the contract will face legal consequences;
Employer can terminate an employee under Article 120 of Labor Law.

In any cases of termination under Article 1, either party could seek compensation or recovertheir rights under Federal Law and its decrees.

Article 2

Employment contract is ended if:

-Employer fails in their obligations (paying salaries, benefits etc)
-If employee files complaint upon closure of employer’s business and the employee is unable to obtain new employment. This will be confirmed by Labor inspection team. Within 2 month’s of such occurance, the employee should file complaint with MOL
-If the court rules infavour of employee with 2 month compensation, under arbitrary termination under Limited Contract, or compensation for arbitrary termination or termination of limited contract.

Article 3

If employee or employer terminates the employment without complying to mandated procedures.

Article 4

All previous decrees with regard to the above subject are null and void.

I am sure the new labour law rules will help ease the labour market with transparency.

About Deepak 505 Articles
Deepak is a passionate blogger with interests in bitcoin, online marketing, and writing.
      • hi sir my name is kumari i am from nepal.before i worked as a sales consultant for 9 months and i cancelled my visa on dec 31st 2015. i got new job from another company but now i got labor ban for 6 month.my previous company is not ready to give me noc letter,soo for this situation what i can do,,,how can i lift my labor ban without noc

  • I came here august 05 2015 my company sent me back home this coming october 05 2015 but they give me noc possible I can comeback here to look another company my visa expire 2016 August now they cancelled.possible anytime or a day I can comeback here in uae

  • Dear Deepak!

    Is that possible if i have Dubai employment visa and i work in Abu-Dhabi for the same company which have branches in both Dubai and Abu-Dhabi.

    Waiting for ur reply……thanks

  • hi Deepak, hope all is well, can I get a job according to new 2016 labor low? I resigned in 25 June 2015, I was 2 years contract but I did not know it was limited or unlimited but it was MOL common contract, how to I know limited contract or unlimited contract? if I ban how I can get job before my ban period complete?
    thanks

  • i came in dubai april 2014, i have limited visa for 2 years, my visa will be finish in april 2016, now i can change a visa in other company before visa finishing, without 6 month ban.

  • Dear Deepak,

    I am a graduate and working as a account asst. but my visa is stamped as carpenter and my salary is 2500AED. My company is not paying the salary on time and I am facing lot of problem because of that. Now I am planing to change my job with a better salary. I have worked here for one year. If I change my job after 2016 Jan with a salary above 3500 AED will I have a ban. Should I have to attest my certificate. Please guide me.

  • Hello Sir,

    My company for more than 2 years, had terminated my Limited contract due to this reasons, They don’t want bank agents coming to our office to talk to me, which happened just recently due to some late payments on my Credit cards, second is that they accused me of tardiness and being frequently absent, in which I never received any written complain or notice if any from company. I admit I have some absents but I have informed them on which they are aware fully, I believe they are making this up just to justify there arbitrary decisions on firing me.
    Finally they are giving me a settlement which does not include a 3 months gross wage. Is this legal? can they do this?

    Thank you so much and sorry for the long email.

    • Rico,
      I think this amounts to disciplinary action in which case, company can terminate you as per Article 120.

  • Dear Deepak,

    I joined on 08.06.2015 and my probation will complete on 07.12.2015. i am not satisfied with my job and my visa is Accountants Assistant and i am a MBA Graduate and my salary is 3500 AED.

    Could you please advice is there any ban if i switch to another job/ is there any consequences that i can face for changing the job .

    please advice.

    thanks
    Syed Rizwan

  • i just need an urgent answer in my question.

    I am working as clerk in a medical center and i saw my labor contract that i was registered July 26, 2015 so until now im still in probation period. m contract is under limited contract. now my problem was my employer is always shouting at me and humiliate me infront of customers and always saying that he will terminate me. and he dont want to see my face. he also said that he dont need me and i dont have brain…,. I cant take this anymore… i want to find another job as i need money for my family but i dont know what will i do. i want to resign and find another job but i dont know if i will going to have a ban or what. pls i need an answer.

  • I came 2013 may I finest my contract first company I now I join new company last mont is their any ban in 2016 of i change job to other company

  • Hi Deepak,

    I joined my Company in sept’14. I got terminated in Oct ’15. My Company has provided a three month notice to me as per my unlimited contract. I have the following queries:
    1. Is the new labour law applicable to me since my last day notified to be is in mid of jan’16?

    2. In case should I decide to head home now, with just weeks to start of my notice period, will I be entitled to complete three months notice period salary or just for the time I served the actual notice period I served?

    3. Will ban be stamped on my passport in this case with the employer terminating my position without a reason?

    Thanks in advance for your response.

  • I have an LLC visa from Dubai with designation as sales executive.It is not yet stamped and not processed.If the employer cancels the visa before stamping,then will i be able to get a grace period of 30 days to exit the country?
    Kindly reply.

  • Hi deepak, I’m a graduate and working as a sales in one village name taiween before dibba, my question is dat, I came to uae in July dis yr, I’m under probation for 6mnth and my salary was very very poor, plz can I change my work with out ban or exit, no offday no over time money I’m working for 12hrs plz advice me what to do tnkz

  • a question is that what are the rules for tourist visa 3 month if a person got job and He over stayed in Dubai and after his visa expires and then he pay fine ..the questions is either he must go for his home country or he can go to kish as well all the practices are being happens for exit and entry ?

  • Hi deepak
    I came here June 10, 2015 my visa as a mechanical engineer unlimited contract in sharjah but my company says me to work as a normal labour with labours , they only need my certificate to their company lisence renewal am a fresher to uae . now I cancel my job I get ban then 2016 onwards I heard no ban for skill 1,2,3 … My question is I cancel visa in 2016 how many days I will stay in UAE to search new job and I want to pay compensation to my company please help me thanks

  • Dear sir,
    I got a new opportunity from some other company.I want some clarification sir. I was joined in my present company 03/02/15. I am having unlimited contract with my present employer and having salary more than 12000 with engineering graduation. The new company is giving hike of 6000.Since I have completed 9 months in this company and completed my probationary I have given one month notice to them. In my contract it was mentioned that it was unlimited contract and notice period will be as per UAE labour law.But my employer is mentioned in my resignation that it is accepted based on 3 months notice like that he mentioned. While our discussion he told me that project is in critical stage I can’t accept this. Also he told that if u want u go to labour court. I don’t know what to do now sir. Kindly help me sir. What is labour law is saying in my situation. Whether one month notice is enough? and my new offer from a free zone company. Kindly help me sir

  • Hello deepak,

    Hope you will be fine.Actually i m working with an insurance company on a commission basis and i dont have any salary and i have unlimited contract.I have a degree of MBA so i need to know that if i switch to any other organization in january so will i face any labour ban according to a new law which i heard will be going to implement from the jan 2016.Need your advice.

    Thanks & regard,
    SYED

  • Hi Deepak,

    I have been working in UAE for 3 months and need to go back home for family and health reasons. My contract states that I only need to give 1 day notice whilst still on probation, but if I do that I fear that they may stop me leaving the country in order to repay housing costs and visa expenses. I feel that leaving the country first could be my best option and then resigning whilst back in the USA, but will that mean I get a lifetime ban from UAE?

  • Hello Sir Deepak,

    I want to ask something,Im a computer engineering graduate and i have a red ribbon diploma and i am currently working in a computer shop my visa is sales and i am planing to look for another job ,my reason is i am not comfortable with my job for some reasons i really want to resign .my question is if i lift my current job and look for another company it is possible i will be ban. im planning to resign next year i am already 6 months on my current job because i heard the New UAE Labour Law Rules this 2016
    .
    waiting for your reply

    thank you.

  • Hello, Mr Deepak,

    My Name is Nilan and I joined in company 2014 November 30th and I’ll be completing my first year in this company this coming 30th.. my question is can i find another job after January?

    My contract is 2 years.

  • Hi Deepak
    I am a Physiotherapist with 6000 salary working for 8months in Dubai . mine s limited contract. Now I have an offer for 12000 in Abu Dhabi. My company refused to give NOC and thy ll put 1year ban . if I resign in Jan 2016, can I move to the new company without NOC and company ban.
    Pls do clarify.
    Thanks

  • Hi deepak
    I came here June 10, 2015 my visa as a telecomunication engineer unlimited contract in dubai but my company says me to work as a normal labour with labours , they only need my certificate to their company lisence renewal am a fresher to uae . now I cancel my job I get ban then 2016 onwards I heard no ban for skill 1,2,3 … My question is I cancel visa in 2016 how many days I will stay in UAE to search new job and I my visa is stamp on 8 august 2015 and i should complete probation period or not and i think my probation will end on10 feburury 2016 and can i give notice 1 month during my probation period kindly help me am worried?

  • Hi Mr Deepak hope you are doing well
    I need your suggestion that I am working in a hospital as a Hospital pharmacist on a limited contract now I have an opportunity above 12000 in Abu Dhabi.
    from new rules the company ban will be removed or not I mean can I get benefit from new rules
    thanks and regards
    waiting for your response

  • Hi Sir
    I am completing 1 year and 9 months on unlimited visa.
    If I resign in Jan 2016 and my visa is canceled, will I get employment ban.

  • Hello Deepak
    I am a teacher by profession.i came here with three months visa and in about one month ten days left i got a job in one company.The gave me probation period of three months and it ending in january.my visa is out and no medicals yet.i dont like to work with the company again because of too much racism.In my probation period the said either party can decide to terminate the contract.please what if i do it?will i receive a ban?Am confuse i have got another job that pays thrice to my present one.Help me.

  • Hi Deepak,

    I am planning to leave my current job in Jan 2016 with mutual consent .I have a new offer as well and planning to join them by 2016 Feb.can you please suggest me on the documents to be collected from my current employer which will help me to get a new visa from new employer.

    1.While terminating the contract (7 months from date of joining and unlimited),should i take something in written ?
    2.If so, should i take it on current company letter head ? Arabic should be there on the document ?

    Can you please help me on this urgently

    Thanks

  • Hi deepik Sir,
    I have completed 1 year and 9 month under unlimited contract, I have master degree, but my visa is site supervisor, salary 3000. Can I change the job in January 2016, without labour ban.

  • Hello, deepak
    I am summer and i am working in restaurant. I have more 3 month to complete probation period… but from some other company i am getting good oppertunity for better salary.. as i got information from jan 2016 there were no labour ban for worker… if its possible if i can find other job if i will give resignation to my Senior.. there were no ban for …. just give some proper advice..thankyou waiting for your feed back

  • hello sir,
    Iam working in Abu Dhabi and under UNLIMITED contract, i just finished my 1 year in this company, but i got a better oppurtunity in another PRIVATE company, but they are offering 9000AED salary only. Will i get any ban, if i resign from the current company.?

  • iam and engineer under unlimited contract, am i be facing any labour ban if i resign before 2 years.

  • is their any labour ban for engineers under unlimited contract according to new labour rtule

  • Hey deepak
    I was came 2014 may15 in dubai in labour unlimited visa
    I want to change the job From January
    My company give me NOC
    Can I change job without ban

  • dear deepak i m working as a office boy i finish 1 year in this company now i can change the job or no in the same field or i need to wait 1 jan 2016

  • Pls I came here on the 16 sep.2015 and I have work from that day till now and they treat me like a slave bcos am an Africa I want to cancelled next year and I have two year visa how many days will I have to leave UAR when I cancelled my company next year thank u I need a reply pls

  • HELLO SIR

    NOW IAM DOING JOB IN RENT A CAR AS AN RECEPTIONIST. IAM NOW UNDER PROBATION PERIOD IAM

    A MASTER DEGREE HOLDER. COMPANY PAYING VERY LOW SALARY ONLY 1500 .MY BOSS DOESN’T

    GIVE ME DAY OFF ALSO.NOW I WANT TO CHANGE JOB. IF I CHANGE JOB IS THERE ANY BAN FOR

    ME FROM JAN 2016.

  • I’m working 1yer in electrician (salary 1100) in company but I’m changing to another job his give to (1800) that’s y I’m Chang to company any ban 2016 2 month

  • Plz sar send to reply sar my visa complete to 2017-1-10 now I’m finish 1yer my company not give solary in one month (1100 my salary ) boom Chang 2016 2month his give 1800 that’s y I’m Chang company I have any ban

  • Hi sir i am working as salesmen from april 2014 …now my company terminated me because of 2 houres late reported to shop even i inform through text msg …is theire any ban for me after january 2016??

  • Hello
    I’m here in Dubai from 12-2- 2015. Will I be able to change my job from 2016 I already have searched job and I don’t know what to do .

  • Dear Sir,

    I am a school teacher in dubai from last 11 months and not satisfied with my job and also have a good offer from school in sharjah. I have masters degree in economics. What do u suggest shall I change to new job?

  • Hello Sir. I want to ask you if ever your contract is under U.A.E law.And your working here and after that your company sent you to other country and you work there for few months without extra money.Should be sir you have bonus right?They said if you went there you have bonus.But sad say not a single penny.Thank you Sir more power.

  • Dear deepack
    a good new year comes. I ask questions about my case I’m only 4 month here my new employer, I have plan this coming February finish my 6 months I want to find new job because of some reason like I’m bored to work here and before I apply here my working time is 13 hour’s but after I see my contract 9 hour’s only I want to left this job but I have limited contract, in this case what I’m going to do? I hope you give me exact information and advise about my case.. Thank you so much..

  • Hi Deepak,

    Have a great day

    Kindly let me know about the limited contract rules for resignation/termination during the period of contract.

    Waiting for your prompt response

    Regards

    Rej