Settlement terms for UAE employee who quit mid-contract

I work in the HR department of a Dubai company and one of our employees resigned from employment during the middle of his second limited contract. What benefits do we have to give him as settlement? RM, Dubai

If an employee resigns part way through a limited contract, they are deemed to have broken the terms of the agreement and will be penalised. Article 116 of UAE Labour Law states: “If the contract has been terminated on part of the employee … 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 the contract whichever is shorter, unless the terms of the contract provide otherwise”. If any accrued days of annual leave have not been taken, the employee should be paid for these days but in accordance with 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”. If the individual is returning to a home country, Article 131 applies and this states: “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”.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE.

The advice provided in our columns does not constitute legal advice and is provided for information only.

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