Premature termination of labor contract and compensation

Question

Q: I am terminating my contract under probation period. The company is asking 3 months compensation, is that legal? A: You have not mentioned whether your labour contract is limited or unlimited. Your employer is legally entitled to recover compensation. Quantum will be 45 days and not three months…

Hari Wadhwana · Accepted Answer

Dear Sir/ Madam,

Thank you for getting in touch with me on this.

You have not mentioned whether your labour contract is limited or unlimited. Please advise.

According to Article 116 of the Federal Law No. 8 of 1980 (UAE LABOR LAW), if an employee terminates a contract before the stipulated period then the employee is obliged to compensate the employer for an amount not exceeding 45 days of salary (basic salary and not gross).

Hence your employer is legally entitled to recover compensation but the quantum will be 45 days and not three months as demanded.

I trust you will find this helpful.

Regards,

Hari Wadhwana

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