Entitlement to Notice whilst on Probation (UAE Labour Law)

One question I get asked regularly, is when an employer in the UAE (exc DIFC/ADGM) decides to terminate an employee during the probationary period, is notice required?

The reason for the confusion is partly due to the recent changes to UAE Federal labour law. Many companies, especially those established prior to 2021, based their HR policies on UAE Federal Law (8) 1980, but this has since been repealed and replaced by UAE Federal Law (33) 2021.

Under the previous law, there was a list of situations whereby an employer could terminate an employee. These were known as the Art 120 ‘offences’. Nestled within Art 120 was Art 120.2 that allowed for termination without notice where an employee was engaged on probation and is dismissed either during or at the end of the probation period.

Law (33) of 2021 redefined those situations, and effectively repealed Art 120 and replaced it with Art 44. Art 44 still allows for an employer to dismiss an employee without notice, but doing so whilst on probation is now removed.

This means that the days of terminating an employee without notice during or at the end of probation are now over, unless the employee is found to have committed one of the items listed in Art 44 of Law 33 2021.

Does this mean that all employees are now subject to the statutory 30 days’ notice as provided for under Art 43 of Law (33) 2021? Well, no, that is not the case at all.

Under Art 37 of Law (8) 1980, a worker can be dismissed without notice or severance pay at any point during probation, as reinforced by Art 120. The 2021 law revokes this totally and a new Art 9 now addresses probation. Whilst it still allows for probation for up to six months, it now goes further to state that employees must be given 14 days written notice prior to termination.

This is quite a departure from the previous law and now grants some security towards employees, insofar as employers no longer have the protection of instantly dismissing without notice during probation, unless an Art 44 situation arises.

Employers therefore need to be mindful that with these changes, employees under probation are fully entitled to the statutory 14 days if you wish to terminate, even if they are not up to the task. To forego notice, the employee must be found to be in breach of Art 44. The situations under Art 44 are what one would generally consider ‘gross misconduct’, with some exceptions. The most notable exception being Art 44.4, which allows for termination without notice if the employee did not perform their duties in accordance with the contract and they continued to breach those duties despite the employer conducting a written investigation and had warned the employee on no less than 2 occasions that dismissal may result.

Employee’s Resigning During Probation

The previous law captured both instances, whether terminated by the employer or terminated, by resignation, by the employee. In both instances, notice was not required. The revised law, however, provides for 2 instances whereby the employee must also give notice to the employer during the probation period.

Employee leaving the UAE

In the event that the employee is resigning to leave the UAE, then the period of notice required is that of 14 days, the same period of notice that the employer must give. Whilst this may appear to give rise to employee’s being able to resign, leave the UAE for a short period and then return to a new employer, thus by-passing the 30 days’ notice period, Art 9.4 does provide that an employee who returns to the UAE within a period 3 months from the date of departure, then the new employer shall be liable to compensate the previous employer, as discussed below.

Employee moving to a new employer within the UAE

The notice period changes if the employee is resigning to move to a new employer within the UAE, either mainland or free zone. In this instance, the employee must give 30 days’ notice. Furthermore, the previous employer is also entitled to claim compensation from the new employer, for any losses incurred in employing the employee, such as recruitment costs, costs of bringing the employee into the country, work permit and visa costs and so on. This compensation is not automatic, and the previous employer must claim compensation directly from the new employer or in the event the new employer refuses, via the labour courts.

Additional Compensation

Art 9.5 provides that in the event either party fails to give notice, then the defaulting party is liable to pay compensation to the other party that is equal to the workers wage for the notice period or remaining period thereof.

In the case of employee’s failing to give notice, it is uncertain if this means compensation in addition to the employee not receiving the wage due for the notice period or just forfeiture of the wage that would have been due had the employee completed the required notice period. Some lines of thought believe that it is in addition to what the employee would have been entitled to had they completed the notice period, but this would suggest that the employer is effectively double compensated and in fact receives compensation twice; the amount the employer saved by not paying the employee who did not complete notice, plus an additional amount equal to the notice period, which appears contrary to UAE law.

Conclusion

Law 33 has now been in operation for 2 years and most companies should have implemented the changes, although I still see many working under the old 1980 law, especially when it comes to probation, dismissal and severance.

The main tips are as follows:

1. Ensure you have updated employment contracts;
2. Ensure that your HR policies, especially concerning disciplinary, are up to date and in line with the provisions of Law 33 2021;
3. If an employee is engaged on 3 months’ probation, make it clear that it can be extended by a further 3 which will not amount to a ‘new’ probation period, merely a continuation of the current;
4. Remember that all employees are entitled to notice of termination, whether under probation or not and only those subjected to disciplinary action, as per the law, and found to be in breach of the provisions of Art 44 can be terminated without notice.
5. Employer’s may be entitled to claim compensation from the new employer, if the employee resigns during probation, even if they give the appropriate notice.