Terminating an employee is sometimes an absolute necessity for a business. Companies are not expected to employ staff indefinitely if they are not performing as per the expected standards and job requirements. However, letting an employee go is a difficult situation that many companies try to avoid. This is particularly tough for startups and small companies, as they do not usually have HR policies in place or HR professionals working in the business to handle the termination.
There are different obligations and employee rights that need to be taken into consideration when ending an employment contract. Depending on the reason, terminating an employee can take a number of forms, and it is recommended that employers follow a robust policy and set of procedures to ensure the separation is handled in a professional and legally compliant manner, which is aligned to best practice.
Here are five steps that you need to follow to manage the termination in a fair and legal way:
1. Provide a reason for the termination
When it comes to the UAE, if you want to terminate an employee, you must provide a valid reason, otherwise if the employee pursues a claim against the company, it is likely that the UAE court will deem the dismissal as arbitrary. Currently, the maximum compensation for arbitrary dismissal is three months remuneration, and a guaranteed bonus or commission may also be considered. The reason needs to be relevant to the work in order to be considered as valid, and typically includes an inability to do the job, poor performance or conduct, changes to operational requirements, or gross misconduct.
2. Adhere to the notice period
It is important to provide advance notice of the termination, unless in the case of gross misconduct where you can initiate the termination without prior notice or end of service benefits. The notice period has to be in accordance with the contract, and it is vital that you put it in writing so that it can be documented to protect your business against possible future litigation. The minimum notice period is 30 calendar days, however during probation, if the employee is not performing up to the required standards, you can terminate them without giving any advance notice.
3. Stay legal
The principal legislation that governs employment matters is the UAE Labor Law, and companies need to comply with its regulations. If you want to avoid legal consequences, there are rights and obligations that you need to adhere to. The law dictates when you can terminate an employee on disciplinary or medical grounds, sets parameters for job abandonment and provides reasons for gross misconduct. The law has further provisions in place that govern statutory procedures. For example, prior to terminating someone on disciplinary grounds, the employee will need to have received the required number of warnings, and you will need to be able to demonstrate that you have provided a reasonable time for them to correct their performance or behavior. The law further includes time limits to initiate the disciplinary and determine any disciplinary sanction.
4. Set a HR process in place
As an employer, getting the termination wrong can have significant implications on your business, so you need to protect it by ensuring it is done in the right way. Therefore, it is important that you set a fair and responsible in-house process to manage the separation. Let’s take an underperforming employee for example; if you are dealing with such a case, you should discuss your concerns with the individual, provide an improvement plan, and hold regular meetings to review their progress. They should be made aware that a termination is one possible outcome if things don’t improve to the expected standard. So as long as you have set and gone through a process, there should be no surprises for the decision. In this way, you can demonstrate that you have handled the separation in a professional and cordial manner, and have worked with the employee during the process.
5. Document everything
It is considered best practice to keep a record of any discussions and meetings to ensure that you and your employee’s expectations are clearly understood. Even though it takes time, it is used as a baseline if you are required to defend your decision. Information such as written performance evaluations, disciplinary records, and warnings should be gathered and kept in the employee’s file. If you do not have formal documentation, it is best to postpone the termination until you gather the right evidence. The decision to terminate should be backed up by sufficient documented evidence, otherwise your interests, as a business, will not be protected if the termination becomes problematic.
And lastly, we often advise our clients to stay within the legal parameters and only consider termination once all other options have been exhausted to protect the business from any reputation or financial damage. We recommend that companies should develop and maintain an employee handbook or HR policy manual that outlines the minimum requirements set out in labor laws, and use it as a communication tool to ensure the process is smooth, and that all necessary information has been provided.