VoxxArrive · UAE onboarding topic
End of Service and Termination Process in the UAE: An Employer's Guide (2025–2026)
Ending an employment relationship in the mainland UAE follows a fixed legal sequence under Federal Decree-Law No. 33 of 2021: serve written notice of 30 to 90 days, pay the full and final settlement (including end-of-service gratuity) within 14 days of the last working day, then cancel the MOHRE work permit before cancelling the ICP/GDRFA residence permit. Gratuity is 21 days' basic salary per year for the first five years and 30 days per year thereafter, capped at two years' wages, and - since February 2022 - is paid in full even when the employee resigns. A one-year work-permit ban now applies only in three narrow cases, not routinely on resignation.
Steps
- 1. Serve written notice (30–90 days) - Under Article 43, either party may terminate for a legitimate reason on written notice of not less than 30 and not more than 90 days. The worker keeps full wages during notice and is entitled to one unpaid day per week to seek new work. A party that fails to serve notice must pay a 'notice allowance' based on the last wage for the un-served period.
- 2. Confirm the legal basis for ending the contract - Termination must fall within a lawful ground (Articles 42/43/45). Summary dismissal without notice is only allowed in the specific cases listed in Article 44 (e.g. forged documents, proven 7+ consecutive or 20+ non-consecutive days' unauthorised absence, assault, gross misconduct) and must follow a written investigation. Dismissing a worker for filing a legitimate MOHRE complaint or lawsuit is 'illegal termination' under Article 47.
- 3. Calculate and pay the full and final settlement - Within 14 days of the termination date, pay all outstanding wages, unused-leave pay, notice allowance if applicable, and end-of-service gratuity. Gratuity (Article 51) needs at least one year of continuous service: 21 days' basic salary per year for the first five years, 30 days per year thereafter, capped at two years' wages, calculated on basic salary only. Since February 2022 resignation and termination attract the same full gratuity - the old one-third/two-thirds resignation reduction is abolished. The employer may deduct amounts the worker owes.
- 4. Cancel the MOHRE work permit / labour contract - Submit the cancellation to MOHRE. The request requires the employee's signed acknowledgement that wages and end-of-service entitlements have been received. The work permit must be cancelled before the residence permit.
- 5. Cancel the residence permit and Emirates ID (ICP or GDRFA-Dubai) - After the work permit is cancelled, cancel the residence visa through ICP smart services (or GDRFA in Dubai). This also cancels the linked Emirates ID. Any dependants sponsored by the employee must be dealt with (cancelled or re-sponsored) before or alongside the sponsor's cancellation.
- 6. Observe the post-cancellation grace period - The worker has a grace period to leave or transfer status: 180 days (Golden/Green/Blue residence and their families), 90 days (skilled workers levels 1–3 and property owners), 60 days (permits with a guarantor/host), or 30 days (all other categories). After it lapses an overstay fine of AED 50 per day applies.
Timeline
Notice period 30–90 days (set in the contract, symmetric between the parties). Full and final settlement, including gratuity, is legally due within 14 days of the last working day. Work-permit then residence-permit cancellation are typically completed within a few working days each once documents are in order (exact processing times are administrative and not fixed in law). The worker then has a 30–180 day grace period, depending on visa category, before overstay penalties begin.
Cost & fees
Gratuity is the main cost: 21 days' basic salary per year (years 1–5) and 30 days per year thereafter, capped at two years' wages. Verified ICP residence-permit cancellation government fees are AED 50 (application), AED 100 (exceptional cancellation) and AED 100 (smart services); a AED 5,000 guarantee applies if cancelling a sponsor's permit without cancelling dependants. Overstay after the grace period is AED 50 per day. The MOHRE work-permit cancellation fee, typing-centre/PRO charges and any DEWS/savings-scheme contributions are not verified here.
Your task slice
2 of the 57 onboarding tasks apply here.
Confirm gratuity/end-of-service accrual tracking has started in payroll
Reset and communicate post-probation notice-period terms (30-90 days)
Some figures on this page vary by jurisdiction, zone or nationality, or could not be independently confirmed from a public source at time of writing - confirm the current figure with the regulator before relying on it.
Sources
- UAE Government Portal (u.ae) - End of service benefits for workers in the private sector (gratuity formula, 14-day deadline, Article 51)
- UAE Government Portal (u.ae) - Terminating employment contracts and arbitrary dismissal (Articles 43, 44, 47)
- UAE Government Portal (u.ae) - Banning the issuance of a new work permit for one year (ban cases and exemptions; Ministerial Resolution No. 47 of 2022)
- ICP - Cancellation of residency permits (process, fees, grace periods, overstay fine)
Frequently asked
Does an employee who resigns still get full gratuity?
Yes. Since the reforms took effect in February 2022 under Federal Decree-Law No. 33 of 2021, an expatriate who has completed at least one year of continuous service receives the same full gratuity whether they resign or are terminated. The old rule that cut a resigning employee's gratuity to one-third or two-thirds for under five years' service has been abolished.
Can we cancel the residence visa before paying the employee?
No. MOHRE requires the employee's signed acknowledgement that wages and end-of-service entitlements have been received before the work permit is cancelled, and the work permit must be cancelled before the residence permit. The full and final settlement is legally due within 14 days of the last working day.
Will the employee get a labour ban if we terminate them?
Not routinely. Under the current rules a one-year work-permit ban applies only in three cases: the worker leaves during probation without the employer having breached the contract, a valid 'work abandonment' report is proven, or the permit was at a fictitious establishment. Skilled workers, Golden visa holders and those on a family visa are further exempt. A normal, lawful termination or resignation does not trigger a ban.
How much notice must we give - and can it differ from the employee's notice?
Between 30 and 90 days, as set in the contract (Article 43). The obligation is symmetric: the employer cannot bind itself to a shorter notice than it requires from the employee. A party that fails to serve the agreed notice must pay a notice allowance based on the last wage for the un-served days.
When can we dismiss without notice?
Only in the specific gross-misconduct cases in Article 44 - for example forged documents, causing serious deliberate loss, assault, or unauthorised absence of 7+ consecutive or 20+ non-consecutive days in a year - and only after a written investigation. Even then, accrued gratuity and other earned entitlements remain payable.