Morgan Lewis recently hosted the latest session in its Navigating Employment Law in the Middle East webinar series, focusing on the legal framework governing termination of employment in the Abu Dhabi Global Market (ADGM). The session formed the first of four webinars dedicated to termination issues across key Middle Eastern jurisdictions.
The webinar explored the ADGM Employment Regulations 2024 (Regulations), as amended, which came into force in April 2025 and highlighted the practical and legal factors employers should consider when managing employee exits in the ADGM.
Termination on Notice
The webinar began by examining the most common method of ending employment in the ADGM: termination on notice. Under Article 56 of the Regulations, either the employer or employee may terminate employment at any time by giving written notice.
The Regulations prescribe minimum notice periods of:
- seven calendar days where the employee has less than three months of service; and
- 30 calendar days where the employee has completed three or more months of continuous service.
While parties cannot contract for shorter notice periods, they may agree to longer periods, and notice periods of three to six months are commonly used for senior or executive employees.
The presenters also discussed the different ways in which notice periods may be managed in practice. Employees may continue working as normal, be placed on garden leave, or receive payment in lieu of notice (PILON). The Regulations expressly recognize an employer’s right to place employees on garden leave, although employers are encouraged to include detailed contractual provisions clarifying the employee’s obligations during that period.
Importantly, PILON cannot be unilaterally imposed by the employer. Instead, the employee must provide written consent to the arrangement on or after notice of termination has been issued. This means that a PILON clause in an employment contract will not be sufficient to enable an employer to impose PILON.
Exceptions to Notice Requirements
The webinar also addressed circumstances in which statutory notice requirements do not apply:
- termination for cause;
- termination during probation (where the minimum notice is seven days for the entire probation period of up to six months); and
- expiry of a fixed-term contract.
Where an employer fails to provide the required notice, it may be liable to compensate the employee for the wages and benefits they would have received during the unserved notice period. The Regulations do not impose an equivalent statutory obligation on employees who fail to work through their notice.
Statutory Entitlements on Termination
In addition to notice entitlements, the webinar covered the statutory payments and benefits employees may receive on termination, including end-of-service gratuity. The presenters noted that recent amendments to the ADGM framework strengthened employee protections by ensuring gratuity remains payable even where an employee is dismissed for cause.
Termination for Cause
The session also considered “termination for cause,” which has a specific statutory meaning under Article 57 of the Regulations. Under this provision, either party may immediately terminate employment when the conduct of the other party is such that a reasonable employer or employee would regard summary termination as justified.
Employers should approach summary dismissal cautiously, as there is a high threshold for establishing cause. Examples cited in ADGM guidance and English case law include serious criminal conduct such as fraud or embezzlement.
Common Grounds for Termination
The presenters identified four common scenarios that frequently lead employers to consider termination:
- poor performance;
- misconduct;
- gross misconduct; and
- reductions in force or redundancy.
The webinar stressed the importance of ensuring that any termination decision—whether with notice or for cause—is supported by clear evidence and a well-documented rationale, particularly given the litigation risks associated with employee claims.
Risk Factors
The webinar also focused on several key legal risk areas that employers should consider when making termination decisions.
Discrimination and Harassment
Under Article 53 of the Regulations, employers are prohibited from discriminating against employees on any of the eight protected grounds identified in the legislation. The Regulations prohibit direct discrimination, indirect discrimination, and harassment. Harassment includes unwanted conduct related to a protected ground that creates an intimidating, hostile, degrading or offensive working environment or violates an employee’s dignity.
Discrimination claims may arise not only from the decision to terminate but also from the process leading to dismissal, including the application of workplace policies, performance management processes, and disciplinary investigations.
Victimization
Article 54 of the Regulations contains protection against victimization. Employers are prohibited from subjecting employees to any detriment, including dismissal, as a result of carrying out a “protected act,” such as raising allegations of discrimination or participating in related proceedings.
The presenters emphasized that employers should exercise caution when contemplating disciplinary action or termination involving employees who have recently raised grievances, complaints, or regulatory concerns.
Consequences of Breach
There is potentially significant financial exposure associated with discrimination and victimization claims. Where an employer breaches the Regulations, the ADGM Courts may award compensation of up to three years’ wages, excluding variable pay, considering factors such as the employer’s conduct, injury to feelings, and financial loss suffered by the employee.
Protected Disclosures and Whistleblowing
The presenters also discussed whistleblowing protections under the ADGM framework. Employees may make protected disclosures relating to suspected breaches of ADGM legislation, regulatory misconduct, money laundering, fraud, or other financial crimes.
Employers are prohibited from retaliating against employees who make protected disclosures, including by dismissing, disciplining, or pressuring employees to resign. Importantly, compensation for retaliation claims is uncapped, with the court empowered to award such amount as it considers “just and equitable” in the circumstances.
The webinar noted that these protections are particularly significant for employers operating within regulated sectors such as financial services.
Other Considerations
The webinar concluded with several additional considerations relevant to employment terminations in the ADGM.
Settlement Agreements
The use of settlement agreements is common and allows parties to waive employment-related claims, provided certain statutory requirements are satisfied. Under the Regulations, settlement agreements must:
- be in writing;
- be signed by both parties;
- relate only to existing or pre-existing claims;
- confirm that the employee had the opportunity to obtain independent legal advice; and
- be supported by valid consideration.
Right to Written Reasons and References
Employees are entitled to request written reasons for termination and an employment reference, both of which must generally be provided within 21 calendar days of the employee’s request. Failure to comply may expose employers to financial penalties.
Payment of Termination Entitlements
The webinar highlighted the strict deadlines applicable to final payments. Under Article 14 of the Regulations, employers must pay wages and other amounts due within 21 calendar days of termination, excluding variable pay.
Where payment is delayed, employers may be liable for a penalty equal to the employee’s daily wage for each day of delay, capped at six months’ remuneration and subject to certain limitations and judicial discretion.
Immigration and Health Insurance Obligations
Employers are required to cancel sponsored visas and work permits as soon as reasonably practicable and are prohibited from conditioning visa cancellation on employees waiving legal rights or making payments to the employer. Employers are responsible for canceling employee health insurance upon termination, subject to insurer administrative requirements.