7. Termination of Employment Contract and End of Service Remuneration

CHAPTER ONE – TERMINATION OF EMPLOYMENT CONTRACT

Article 113

The employment contract is deemed to be terminated in any of the following cases:

  1. In the event of mutual consent by both parties to terminate the contract provided that the employee’s consent is made in writing.
  2. On expiry of the period specified in the contract unless the contract is expressly or implicitly extended in accordance with the provisions of this Law.
  3. At the option of either party in unlimited contracts provided that the provisions of this Law regarding warnings and acceptable causes for termination of the contract without abuse are fully complied with.

 

Article 114

A contract of employment shall not expire by reason of death of the employer unless the subject matter of the contract is related to him in person. However, the contract shall terminate by reason of death of the employee or in case of his total disability to perform duties established by a medical report approved by the competent State Medical Authority.

If partial disability of an employee permits him to perform different duties which conform with his health state, the employer shall transfer the employee, at the latter’s request, to another job of such other duties and shall pay him the remuneration normally paid by the employer in similar cases without prejudice to entitlement and indemnity accrued to the employee in accordance with this Law.

 

Article 115*

If the employer has terminated an employment contract with a limited period, for reasons other than those provided for under Article (120) hereof, he becomes liable for payment of compensation to the employee against damages sustained by him, provided that the sum of compensation in all events, may not exceed the total pay due to him for a period of three months or for the remaining period of contract whichever is shorter, unless the terms of the contract provide otherwise.

*Amended by Federal Law No. 12 of 1986.

 

Article 116*

If the contract has been terminated on part of the employee, for reasons other that those provided for under Article (121) hereof, the employee becomes liable for compensating the employer against losses incurred by him in consequence of contract termination, provided that the amount of compensation, may not exceed half a month’s pay for a period of three months or for the remaining period of contract whichever is shorter, unless the terms of the contract provide otherwise.

*Amended by Federal Law No. 12 of 1986.

 

Article 117

  1. The employer and employee may terminate the employment contract with unlimited period, for a valid reason at any time after conclusion of the contract by written notice duly given to other party, thirty days at least prior to termination.
  2. In respect of daily pay employees period of notice shall be as follows:
  1. On week in the employee has worked for more than six months but less than one year.
  2. Two weeks if the employee has worked for at least one year.
  3. One month if the employee has worked for at least five years.

 

Article 118

The contract shall continue to be valid throughout the period of warning referred to in the preceding Article and shall expire with the expiry date of the warning. The employee shall be entitled to full pay during the notice period on the basis of last pay he earned, and he shall have to perform his duties during such period if so instructed by the employer.

It may not be agreed to waive or reduce period of warning but it may be agreed to increase such period.

 

Article 119

If the employer or the employee has failed to serve notice to the other party for termination of the contract or has reduced the notice period, the party obliged to serve the notice shall pay to the other party an indemnity called “Compensation in lieu of notice”, and it is incurred by the other party as a result of failure to give notice or for reduction of said period, and the indemnity shall be equal to the employee’s pay for the notice period in full or in proportion to the diminished part. In regard to employees on monthly, weekly, daily or per hour work pay the notice allowance shall be computed on the basis of last pay earned by them. With regard to employees paid on piece work basis, allowance shall be calculated on the basis of the average daily pay provided for in Article (57) hereof.

 

Article 120

The employer may dismiss the employee without notice in the following cases:

  1. If the employee adopts a false identity or nationality or if he submits forged documents or certificates.
  2. If the employee is appointed under a probationary period and dismissal occurred during or at the end of said period.
  3. If he commits an error causing substantial material loss to the employer provided that the latter advises the labour department of the incident within 48 hours from having knowledge of the same.
  4. If the employee violates instructions concerning safety of the place of business provided that such instructions are displayed in writing at conspicuous places and in case of an illiterate employee the latter be informed verbally of the same.
  5. If he fails to perform his basic duties under the contract of employment and persists in violating them despite formal investigation with him in this respect and warning him of dismissal if the same is repeated.
  6. If he divulges any secrets of the establishment where he is employed.
  7. If he is awarded final judgement by the competent court in respect of an offence prejudicing honour, honesty or public morals.
  8. If during working hours he is found drunk or under the influence of drug.
  9. If in the course of his work he commits an assault on the employer, the manager or any of his colleagues.
  10. If he absents himself without lawful excuse for more that twenty intermittent days or for more than seven successive day during one year.

 

Article 121

The employee may leave the service without notice in the following cases:

  1. If the employer does not fulfill his obligations towards the employee as provided for in the contract or in this Law.
  2. If the employer of his legal regal representative has committed an act of assault against the employee.

 

Article 122

Termination by the employer of an employee’s service is considered arbitrary if the cause for such termination has nothing to do with the work. In particular, termination is considered arbitrary if the employee’s service has been terminated on grounds, or a reasonable complaint lodged by him to the competent authorities, or on grounds of a justifiable action brought by him against the employer.

 

Article 123*

  1. If the employee has been arbitrarily dismissed, the competent court has the jurisdiction to give judgement against the employer for payment of compensation to the employee. The court shall determine the amount of this compensation, taking into consideration the nature of work sustained by the employee, period of service and after investigation of dismissal circumstances. Provided that in all cases the amount of compensation should not exceed the employee’s pay for a period of three months, to be worked out on the basis of last pay due to him.
  2. The provisions of the preceding clause shall not prejudice to the employee’s entitlement to the gratuity due to him and notice period provided for in this Law.

*Amended by Federal Law No. 12 of 1986.

 

Article 124

The employer may not terminate the service of an employee for his health deficiency before he avails himself of the leaves lawfully due to him. Any agreement to the contrary is deemed null and void even if it is made before this Law comes into operation.

 

Article 125

The employer shall provide the employee at the end of his service and at the latter’s request with an end of service certificate free of charge. Said Certificate shall include date of appointment and date of termination, total period of service, nature of work performed by him and his last pay plus allowances, if any. Certificates or diplomas, papers and tools belonging to the employee shall be returned to him.

 

Article 126

If any change takes place in the form of the establishment or in its legal status, valid contracts at the time of change shall continue to exist so between the new employer and the employees of the establishment, and service shall be deemed to be continuous. Both the former and the new employers shall jointly be liable for a period of six months for the fulfillment of obligations arising from contracts of employment in the period prior to such change and after the lapse of the said period the new employer shall be solely responsible.

 

Article 127

If work assigned to the employee allows to acquaint with the employer’s clients or have access to the secrets of his work, the employer may oblige the employee that after termination of the contract he may not compete with him or take part in any business interest competitive to the employer’s. Such agreement shall be valid only if the employee has reached the age of 21 years at the time of its being executed and if the agreement is limited with respect to the place, time and nature of work to the extent as is necessary to safeguard the lawful interest of business.

 

Article 128

Any non-national employee who absents himself from work without lawful reasons prior to the end of the contract for a limited period, may not take up employment elsewhere even with the consent of the employer for one year after the date on which he absented himself from duties. And no other employer who is aware of that may employ or keep such employee in his service during such period.

 

Article 129

If the non-national employee has notified the employer of his desire to terminate the contract with unlimited period and has absented himself from work before the end of the legal notice period, he may not take up employment elsewhere before the lapse of one year from date of absence from work, even with consent of employer, and no other employer, who is aware of the case may recruit him or keep him in service before the end of such period.

 

Article 130

The provisions of Article (128) and (129) exempt non-national employee who obtains prior approval of the Minister of Labour and Social Affairs before taking up another employment with the approval of the original employer.

 

Article 131

Expenses for repatriation of an employee to his place of origin or any other place agreed upon by both parties shall be borne by the employer. If the employee after the end of his contract takes up employment somewhere else, repatriation expenses upon termination of his service shall be paid by the last employer subject to the provisions in the preceding clauses, and if the employer has failed to repatriate the employee and has not paid the repatriation expenses, the competent authorities shall do this at the employer’s expense by way of attachment. If the cause for termination of contract is attributed to the employee, his repatriation will be arranged at his own expense if he has the mean to pay.

 

Article 131 (Repeated)*

  1. In application of the provisions stated in the preceding clause, the expenses of employer’s repatriation shall mean the cost of his travel ticket and whatever is provided for in the employment contract or in the bylaws of the Establishment, such as the employee’s entitlement to travel tickets for his family and costs for shipment of his luggage.
  2. In the cases where the employer provides the employee with accommodation, the employee shall be obliged to vacate the accommodation within a period not to exceed thirty days from the date of his service termination.
  3. The employee may not delay vacation of accommodation, thereafter, for any reason whatsoever, provided that the employer fulfills his obligation towards the employee with respect to the followings: a) Expenses defined in Clause (1) under this Article. b) End of service remuneration and any other dues assumed by the employer under the employment contract or the bylaws or the Law.
  4. However, if the employer raised a dispute with respect to the amount of expenses and dues referred to above; the competent labour Department shall determine urgently the amount of such expenses and dues, within one week of a notification being sent to it, provided always that after such determination is made by the Labour Dept. the employee must be informed forthwith.
  5. In such a case, the validity of the thirty days period referred to in Clause 2 under this Article, shall take effect from the date, the employer deposits the expenses and dues determined by the labour Department, with the treasury of Labour Dept. as a trust. If however the employee has failed to vacate the accommodation after expiry of the said thirty days, the Labour Department, in cooperation with the competent authorities in the concerned Emirate, will take the necessary administrative action to secure vacation.
  6. No provisions under this Article is deemed to prejudice the right of employee to litigate thereabout before the competent court.

* Added by Federal Law No. 12 of 1986.

Article 131-a-1*

  1. Employer shall undertake to submit a bank guarantee to the competent labour department. The type, amount, procedures and companies and establishments subject to this condition, as well as other relevant provisions shall be defined by a Cabinet Resolution. Such guarantee shall be for the good performance of the employer’s obligations stipulated in Articles 131 and 131-a herein.
  2. Deduction of amounts from the bank guarantee mentioned in Para (1) of present article shall be by virtue of a court judgement, except for the following: a. Return expenses of the employee to his home country or wherever as agreed with employer. b. Amounts acknowledged by employer before the competent labour department as entitlements of employee. In both cases, the Ministry may deduct such entitlements from the guarantee referred to in Para (1) hereof and pay the same to the employee to settle his dues.

* Added by Federal Law No. 12 of 1986.

 

CHAPTER TWO – END OF SERVICE REMUNERATION

Article 132*

The employee who has completed one year or more in the continuous service, is entitled to the end of service remuneration at the end of his service. Days of absence from work without pay are not included in computing the period of service, and the remuneration is to be calculated as follows :

  1. Twenty one day’s pay for each year of the first five years of service.
  2. Thirty days pay for each additional year.

Provided that the entire total remuneration shall not exceed two year’s pay.

* Added by Federal Law No. 12 of 1986.

 

Article 133

The employee shall be entitled to end of service remuneration in respect of fractions of the year payable pro rata to the time actually worked provided that he has completed one year of continuous service.

 

Article 134**

“Without prejudice to the provisions of some laws regarding the granting of pensions and gratuities to employees of some establishments, the end of service gratuity shall be computed on the basis of last wage which the employee was entitled to, in respect of those drawing their salary per month, week or day, and on the basis of average daily wage stipulated in Article (57) in respect of those drawing their wages on piece work basis. The wage which is considered as basis for computation of the end of service gratuity shall not include anything given to the labourer in kind, housing allowance, transport allowance, travel allowance, overtime allowance, representation allowance, cashier’s allowance, children education allowance, recreation and social services allowance or any other allowances”.

** Amended by Federal Law No.15 of 1985.

 

Article 135

The employer may deduct any amounts due to him from the employee’s end of service remuneration.

 

Article 136

In fulfillment of the provisions of Article (132), cases of employment preceding the effective date of this Law shall not be considered as cases entitling the employee to end of service gratuity. Without prejudice to rights acquired by the employee under any repealed labour law or contracts of employment, agreements, by-laws or regulations of the establishment. In the event of his death, the employee’s gratuity shall be paid to his legal heirs.

 

Article 137

If an employee under a contract with unlimited period has left his work at his own option after a continuous service of not less than one year and not more than three years, he shall be entitled to one third of the end of service gratuity provided for in the previous Article. If the period of his continued service is more than 3 years and less than 5 years he becomes entitled to 2/3 of the said gratuity, but if his continued service exceeds 5 years, he becomes entitled to the entire gratuity.

 

Article 138

If an employee under a contract with limited period leaves his work at his own option before the end of the contract period he shall not be entitled to end of service gratuity unless the period of his continuous service exceeds five years.

 

Article 139

The employee shall be fully deprived of the end of service gratuity in any of the following cases:

  1. if he is dismissed from service for any reason in accordance with Article (120) of this Law or if he leaves his work to avoid dismissal in accordance with the provisions of this Article.
  2. If he leaves his work willingly and without notice in cases other than those enumerated in Article (121) under this law with respect to unlimited period contracts or before he completes five years of continuous service with respect to limited period contracts.

 

Article 140

In any establishment where a saving fund is raised for employees and if the regulations of such fund provide that payments made by the employer to the fund for the account of employee is a legal commitment against the end of service gratuity, the amount of savings or benefits due hereunder shall be paid whichever is greater. If the fund regulations have no provisions that amounts paid by employers is a legal commitment for the end of service gratuity, the employee shall collect amount due to him from the saving fund in addition to the legal gratuity.

 

Article 141

In any establishment where a pension or security schemes or similar schemes are maintained, the employee who is entitled to retirement pension may select either this latter or the prescribed gratuity or whichever from both thus is more favourable to him.