This article offers a detailed look at the process of employment contract termination under the DMCC Labour Law, governed by Federal Decree-Law No. 33 of 2021.
Understanding the key provisions related to contract termination is essential for employers and employees operating within the DMCC Free Zone.
This article will cover the reasons for termination, notice periods, and end-of-service benefits.
We will also outline our firm’s legal services in the context of DMCC labour law termination in 2025.
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Table of Contents
DMCC Labour Law Termination Key Regulations
Employment relationships in the DMCC Free Zone are regulated by Federal Decree-Law No. 33 of 2021, which establishes the legal framework for terminating employment contracts.
This law provides clear guidelines for employers and employees, ensuring a fair and transparent process for ending an employment relationship.
It outlines the rights and obligations of both parties, ensuring that terminations are conducted in a legally compliant manner.
The law also specifies the procedures for handling notice periods, calculating end-of-service benefits, and addressing any disputes related to termination.
By defining the conditions for contract termination, the DMCC Labour Law aims to protect the interests of both employers and employees, ensuring a balanced approach to the termination process.
Reasons for Employment Contract Termination
Under Article (42), the DMCC Free Zone employment contracts can be terminated under specific conditions clearly outlined in the law.
Understanding these conditions is essential for employers and employees to ensure the termination process is conducted fairly and in full compliance.
The Article provides a range of legitimate grounds for termination, including mutual agreement, contract expiry, and other situations such as death, business closure, and serious misconduct.
These grounds have legal requirements, including notice periods, compensation, and entitlements like end-of-service benefits.
Mutual Termination of Agreement
Both parties—the employer and the employee—agree to terminate the contract.
For example, an employer and employee might mutually end the relationship if the employee receives a better opportunity elsewhere.
Contract Term Expiry
Employment contracts naturally end when their term expires unless they are renewed.
For example, if a contract reaches the end of its term and isn’t extended, the employment is considered terminated.
Termination with Proper Notice
Either party may decide to end the contract, provided they give the required notice as specified in the agreement.
For instance, if an employee wishes to leave, they must provide notice according to the contract’s terms.
Death of the Employer or Employee
The employment contract ends if the employer passes away and the contract is tied to their entity.
Similarly, the contract is terminated if the employee dies or becomes permanently disabled (supported by medical documentation).
Business Closure or Employer Insolvency
The contract is terminated if the employer closes the business or declares bankruptcy under UAE law.
For example, the employment contracts end if a company goes into financial distress and ceases operations.
Work Permit Issues
If the employee fails to renew their work permit, and the failure is beyond the employer’s control, the contract may be terminated.
For example, if there are delays in the government processing the renewal, it may result in termination.
Dismissal without notice is also allowed in cases of serious misconduct.
For instance, if an employee is caught committing fraud, engaging in negligence, or violating safety rules, their contract can be terminated immediately.
Notice Period and Required Compensation
Article (43) specifies that the notice period for terminating an employment contract must range between 30 and 90 days, depending on the terms outlined in the contract.
If either party does not comply with the notice period, they must compensate the other party for the entire notice period or the remaining notice duration.
For example, if an employer wants to terminate the contract but fails to provide the required 60-day notice, they must compensate the employee for the 60 days they would have worked.
Employers also have the option to offer additional benefits as part of the employment contract to retain employees, but these must align with the legal framework.
Gratuity after Termination
Employees who complete at least one year of continuous service are entitled to end-of-service benefits, as outlined in Article (51).
These benefits are calculated based on the employee’s basic wage: 21 days of basic salary for each year worked within the first five years and 30 days for each year worked beyond five years.
For instance, if an employee has worked for 6 years, they would be entitled to 21 days’ salary for the first five years and 30 days’ salary for the sixth year.
Employers must pay all due wages and benefits, including end-of-service entitlements, within 14 days of contract termination, as specified in Article (53).
Legal Services for DMCC Employment Terminations
Navigating the legal complexities of employment contract termination under DMCC Labour Law requires expert legal guidance.
Our law firm in UAE provides comprehensive legal services for employers and employees in the DMCC Free Zone, ensuring that the process fully complies with the DMCC labour law termination.
Drafting and Reviewing Employment Contracts
Our legal team helps employers draft and review employment contracts that meet DMCC regulations.
We ensure all terms, including additional benefits beyond the statutory requirements, are clearly stated and legally binding.
For example, an employer may offer extra benefits such as bonuses, allowances, or insurance to attract skilled employees. We make sure these terms are correctly incorporated into the agreement.
Resolving Disputes Related to Termination
Termination disputes are common, particularly in wrongful dismissal cases or disagreements over the notice period or end-of-service benefits.
Our firm provides expert assistance in resolving such conflicts.
If an employee disputes their end-of-service benefits or claims wrongful dismissal, we address the issue through negotiation or formal dispute resolution.
Dismissal Without Notice
If an employer needs to dismiss an employee without notice due to serious misconduct, we ensure that the process is legally justified and in compliance with the law.
If an employee repeatedly violates policies or commits fraud, we ensure the employer conducts a proper investigation and adheres to legal protocols before terminating the contract without notice.
End-of-Service Benefits Calculation
We help employers accurately calculate DMCC labour law termination benefits to ensure that employees receive the correct amount owed to them.
If any disputes arise over the calculation or payment of these benefits, our team assists in resolving the issue efficiently.
For example, if an employee claims their end-of-service benefits were miscalculated, we help ensure the correct amount is paid according to the law.
Filing Labour Complaints and Handling Claims
Our legal experts represent employers and employees in filing and defending labour complaints related to termination disputes, wrongful dismissal, or breach of contract.
For example, if an employer faces a claim for unlawful termination, we provide legal counsel and defense, ensuring that the employer’s rights are protected and the dispute is handled appropriately.
With our expert legal services, employers and employees can confidently navigate the termination process under DMCC labour law, ensuring full legal compliance.
FAQs about Labor Termination Law in DMCC
Contact our firm today for expert legal assistance or advice on DMCC labour law termination.
We offer tailored solutions to ensure your employment contracts and termination processes comply with the latest regulations.
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A law graduate and legal writer focusing on UAE law, he became known for his ability to clarify complex legal concepts through his writings. His work simplifies the intricacies of the legal landscape in the Emirates, helping both locals and expatriates navigate their legal concerns.
