1. Termination Without Prior Notice (Article
44)
Under the current law, an employer may terminate an
employee summarily (without notice) only under specific grounds of gross
misconduct.
The 10 Grounds for Summary Dismissal:
- False
Identity/Forgery: Submitting forged documents or
assuming a false identity.
- Material
Loss: Committing an error causing quantifiable financial
loss (Employer must notify MoHRE within 7 working days).
- Safety
Violations: Breaching written safety instructions
despite being aware of them.
- Failure
of Duties: Failing to perform basic tasks (Requires
a written investigation and two (2) written warnings).
- Disclosure
of Secrets: Sharing confidential intellectual
property that leads to material loss or personal gain.
- Public
Morals/Substance Abuse: Being intoxicated or
committing immoral acts at the workplace.
- Assault:
Physical or verbal assault against colleagues or management.
- Absence:
Being absent without excuse for >20 non-consecutive days or >7
consecutive days in a year.
- Abuse
of Position: Exploiting a professional role for
personal profit (2025 Amendment).
- Unauthorized
Employment: Working for another establishment without
a legal permit (2025 Amendment).
Note on Suspension (Article 40): An
employer may suspend an employee for up to 30 days during an investigation at
half-pay. If found innocent, the employee must be reinstated with full back
pay.
2. End-of-Service Benefits: The Dual System
As of 2026, the UAE operates two co-existing systems for
terminal benefits. Employers can either stick to the traditional model or opt
into the new investment-based scheme.
The Traditional Gratuity System
- Eligibility:
Minimum 1 year of continuous service.
- Calculation:
Based on Basic Salary only.
- 1–5
Years: 21 days' basic salary per year.
- 5+
Years: 30 days' basic salary for each
additional year.
- Cap:
Total gratuity cannot exceed two years' basic salary.
- Dismissal
Rights: Even if terminated under Article 44, the
employee retains their right to accrued gratuity.
The New Alternative Savings Scheme
Instead of a lump sum, employers can choose to pay monthly
contributions into regulated investment funds (Cabinet Resolution No. 96 of
2023).
How the Savings Scheme differs from Traditional
Gratuity:
- Payment
Model: Traditional is a lump sum at the end; the
Savings Scheme is a fixed monthly payment (5.83% for <5 years service;
8.33% for >5 years).
- Funding:
Traditional is "unfunded" (on the company books); the Savings
Scheme is "funded" and "ring-fenced" in external
accounts, protecting it from company insolvency.
- Growth:
Traditional is a static calculation; the Savings Scheme allows the fund to
grow through professional investment returns.
- Employee
Control: In the Savings Scheme, employees can
choose their risk profile (Sharia-compliant, Capital Guaranteed, etc.) and
add voluntary top-ups of up to 25% of their salary.
- Portability:
The Savings Scheme allows employees to keep their fund invested or move it
when changing jobs, rather than receiving a one-time payout.
3. Key Compliance Shifts (2024–2026)
- Dh1
Million Fines: Under Article 60 (Amended), fines
for illegal employment, fictitious Emiratization, or closing a business
without settling dues now range from Dh100,000 to Dh1,000,000.
- Statute
of Limitations: The window to file a labor claim has been
extended to two years from the date of termination (Article 54).
- Small
Claims Resolution: Disputes valued at Dh50,000 or
less are now settled by MoHRE or the Court of First Instance with no
further right to appeal, ensuring rapid justice for minor claims.
- 14-Day
Settlement: All dues (gratuity, leave salary, etc.)
must be paid within 14 calendar days of termination.
Conclusion
The 2026 UAE labour environment prioritises worker
protection and employer accountability. Whether you are managing a
"Bankable Deal Folder" for a new project or auditing your existing HR
records, staying aligned with these amendments is critical to avoiding the new,
heavy penalties.
Disclaimer: This article
provides a general overview and should not be construed as legal advice.
Consult a qualified UAE legal expert for specific cases.
#UAELabourLaw #UAEGratuity #EmploymentLaw2026 #MoHRE
#DubaiBusiness #LegalCompliance #HRUAE
