Termination of Employment in ADGM

The Abu Dhabi Global Market (ADGM) is a thriving financial-free zone in the heart of the United Arab Emirates. Over the years, it has attracted numerous businesses and investors, both local and international, looking to capitalize on the region’s burgeoning economic opportunities. As businesses thrive and evolve, there inevitably comes a time when the termination of employment becomes a necessary step. In this article, we explore the various aspects of the termination of employment in ADGM from the employer’s perspective. 

Termination Laws in ADGM 

Employment laws in ADGM are designed to strike a balance between the rights of employers and employees, ensuring a fair and transparent process for all parties involved. Employers should be well-versed in the legal framework to navigate the termination process without running afoul of the law. 

One of the key pieces of legislation governing employment in ADGM is the Employment Regulations. These regulations outline the rights and responsibilities of both employers and employees, covering various aspects of the employment relationship, including termination. 

Grounds for Termination in ADGM 

Terminating an employee in ADGM must be done for legitimate and justifiable reasons. Common grounds for termination include: 

  1. Poor Performance: If an employee consistently fails to meet the performance standards outlined in their employment contract, an employer can consider termination. 
  2.  Misconduct: Instances of gross misconduct, such as theft, fraud, harassment, or violence, can lead to immediate termination. 
  3.  Redundancy: When a company undergoes restructuring, downsizing, or any other legitimate reason for eliminating a role, termination may occur on the grounds of redundancy. 
  4.  End of Contract: Employment contracts may be for a fixed term, and termination occurs naturally when the contract reaches its expiration date. 
  5.  Breach of Contract: If an employee violates the terms of their employment contract, it may provide grounds for termination. 

ADGM Notice Periods 

ADGM employment regulations mandate that both employers and employees provide notice of their intent to terminate employment. The notice period can vary depending on the length of service and the terms specified in the employment contract. 

For example, a standard notice period might be 30 days for employees with less than one year of service and 90 days for those with more than one year of service. However, these periods can be adjusted by mutual agreement or in accordance with the contract’s terms. 

End of Service Benefits in ADGM 

Employers in ADGM are required to provide employees with end-of-service benefits upon termination. These benefits are typically calculated based on the employee’s length of service and final basic salary. Employers must ensure they fulfill this financial obligation to departing employees. 

Termination of Employment Procedures in ADGM 

Proper procedures must be followed when terminating an employee in ADGM. Employers should: 

  1. Inform the Employee: Employers must inform the employee of the termination in writing, stating the grounds and effective date. 
  2. Provide Notice: As previously mentioned, a notice period must be observed, with compensation as per the employment contract. 
  3. Ensure a Smooth Transition: Employers should make arrangements for the smooth handover of responsibilities and the return of company property. 
  4. Conduct Exit Interviews: Exit interviews can provide valuable feedback and help improve the workplace. 

Employer-Employee Dispute Resolution in ADGM 

Despite the best efforts of employers and employees, disputes may arise during the termination process. ADGM offers mechanisms for resolving such disputes through the ADGM Courts and the Office of the Commissioner for Employment Standards. 

Employers should be prepared to handle any potential disputes amicably, ensuring compliance with employment laws and regulations. 

Legal Obligations of Employers in ADGM 

It is essential for employers to be fully aware of their legal obligations when terminating an employee in ADGM. Some key obligations include: 

  1. Providing a clear and valid reason for termination. 
  2. Complying with notice periods and end-of-service benefit calculations. 
  3. Upholding the principles of fairness and non-discrimination during the termination process. 
  4. Ensuring that any termination is consistent with the terms of the employment contract and relevant regulations. 

Legal Counsels for ADGM  Courts 

Given the complexity of employment termination laws in ADGM, seeking legal counsel or consulting with HR experts can be invaluable for employers. Legal professionals can provide guidance on how to navigate the process within the boundaries of the law and help mitigate risks associated with wrongful termination claims. 

Terminating an employee in ADGM, like anywhere else, is a sensitive and legally regulated process. Employers must follow established procedures, act in accordance with the law, and ensure fairness and transparency throughout the termination process. By understanding and adhering to ADGM’s employment regulations, employers can protect their interests while upholding the rights of their employees. It is essential to view termination not as an end but as a necessary step in the evolution of a business, conducted with integrity and respect for all parties involved. 

About ATB Legal

ATB Legal is a full-service legal consultancy in the UAE providing services in dispute resolution (DIFC Courts, ADGM Courts, mainland litigation management and Arbitrations), corporate and commercial matters, IP, business set up and UAE taxation. We also have a personal law department providing advice on marriage, divorce and wills & estate planning for expats. Please feel free to reach out to us at office@atblegal.com for a non-obligatory initial consultation.

by Aparna T Nambissan

Aparna is a legal consultant at ATB legal. She holds a Bachelor’s degree in Law and Commerce from Karnataka State Law University. She is enrolled with the Bar Council of Karnataka.

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