UAE employee faces penalties if fixed-term contract is broken before it expires

I work as a teacher in a private school based in Abu Dhabi. I have completed my first contract of two years and am part-way through my second contract. Recently I received another job offer with a higher salary and better facilities compared to my present organisation. If I resign in the middle of my second contract, what terms and conditions apply to me? Will I get all my benefits? Or do I have to face any consequences? AK, Abu Dhabi

Anyone who resigns part-way through a fixed-term contract is breaking the terms of the agreement and will be penalised for doing so. 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 contract whichever is shorter, unless the terms of the contract provide otherwise.” If accommodation is provided, it must be vacated within 30 days of the end of service, per Article 131.

In line with Article of 138 of the law, no gratuity will be payable in this situation. The law states: “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.” Finally, under the current rules AK should not receive an employment ban if there is mutual consent to leave, proper notice is given, and he has qualifications higher than a high school certificate.


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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