Welcome back to Lawgical, where we untangle the legal knots so that you do not have to. I am Ludmila Yamalova, a US-qualified lawyer based in Dubai. In each episode, we break down complex law into clear, practical insights that you can actually use.
Today’s topic is termination, resignation, and the big question: what does the law actually say about so-called wrongful termination in the UAE? This episode is for employees, business owners, and HR professionals trying to understand the limits and rights when it comes to ending an employment relationship.
Many clients come to us blindsided when they are let go. They often want to fight back, saying things like:
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“I was terminated without warning—surely that is illegal.”
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“They fired me just after I returned from my medical leave.”
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“They gave no reason, just said I was no longer needed.”
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“They pressured me to resign after months of bullying.”
To many, this feels deeply unjust. Understandably, they want to know what recourse they may have. But the reality under UAE federal employment law may not be as simple as one would expect.
The Legal Framework
What we are talking about in simple terms is what employees often feel is wrongful termination—or termination without cause.
The questions are:
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Does UAE law recognise wrongful termination?
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If so, what compensation can an employee expect?
There are three different employment laws in the UAE:
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UAE Federal Law (Labour Law – Decree Law No. 33 of 2021) – applies to all of the UAE except two areas.
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DIFC Employment Law – for Dubai International Financial Centre.
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ADGM Employment Regulations – for Abu Dhabi Global Market.
Apart from DIFC and ADGM, all other companies and employees—whether in free zones or on the mainland—are subject to the UAE Federal Law.
Employment at Will
Under the Federal Labour Law, employment is considered at will, similar to how it is treated in the United States.
What does this mean?
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A company can terminate an employee at any time for any reason.
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An employee can resign at any time for any reason.
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Neither party can be forced to continue against their will.
Because of this:
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There is no penalty for a company terminating an employee before the end of a contractual term.
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There is no penalty for an employee resigning early.
Statutory Obligations
While there is no “wrongful termination” penalty under the current law, there are statutory obligations that must be met by the employer (and by the employee in certain cases).
If an employer terminates an employee, they must provide:
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Minimum one-month notice (or payment in lieu).
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Unpaid salary, bonuses, or commissions owed.
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Payment for accrued but unused leave.
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End-of-service gratuity:
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21 days of basic salary per year of service for the first 5 years.
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30 days of basic salary per year from the 6th year onwards.
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Repatriation ticket to the employee’s home country if they are leaving the UAE.
These are the maximum statutory entitlements under the federal law.
No Automatic Compensation for “Unfair” Termination
Even if termination feels unfair or unjust—such as being dismissed after many years of service—there is no extra compensation under the current law, as long as the statutory obligations above are met.
Under the old law (pre-2021), employees could claim up to three months’ salary for “arbitrary dismissal” in addition to their statutory entitlements. That provision no longer exists in the current law.
The Retaliation Exception
Article 47 of the Labour Law allows for additional compensation (up to three months’ salary) only if termination was in retaliation for the employee:
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Reporting the employer to a government authority for illegal or wrongful conduct; or
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Filing an official complaint that results in the authorities ruling against the employer.
The burden of proof is high, and this exception is rarely applied in practice.
Misconduct and Harassment
Harassment, discrimination, and unsafe working conditions are unlawful. However:
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These issues are handled by regulatory authorities (such as MOHRE or free zone authorities).
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The penalties are usually applied against the company, not as direct compensation to the employee.
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Employees may bring separate civil claims for damages if they can prove quantifiable losses (e.g., medical expenses, loss of income due to harassment), supported by evidence such as official findings by authorities and medical reports.
This type of claim is outside the Labour Law and falls under general civil compensation rules.
DIFC and ADGM
DIFC Employment Law (Law No. 2 of 2019) and ADGM Employment Regulations have similar “termination with notice” rules but also include:
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Broader anti-discrimination provisions (age, gender, race, maternity, etc.).
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Whistleblower protections.
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In ADGM, additional disciplinary process requirements before termination for cause.
In both jurisdictions, if an employee can prove discrimination, retaliation, or procedural breaches, they may have stronger grounds to claim damages than under the federal law. However, the burden of proof still rests on the employee.
Summary
In the UAE, under all three employment law regimes:
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Employment is generally at will.
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Termination and resignation are allowed at any time, subject to notice.
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The maximum entitlements under the Federal Labour Law are:
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Notice (or pay in lieu)
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Unpaid dues
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Accrued leave pay
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End-of-service gratuity
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Repatriation ticket
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Wrongful termination compensation, as it existed in the old law, no longer applies—except in narrow retaliation cases.
For most employees, pursuing a lengthy legal case for “unfair dismissal” will result in the same statutory entitlements that the employer is already obligated to pay.
If you found this episode useful, visit lylawyers.com for more resources. We are also on Apple Podcasts and Spotify, and you can watch our video podcast on YouTube. Until next time—stay informed, stay safe, and keep things Lawgical.
