Resolving Termination Letter Disputes Effectively
Most termination cases are made harder by the letter itself, written quickly from an older one before anyone settled what the legal basis for ending the relationship was.
The ground stated in a termination letter is the ground that party will be held to, and changing it later is read as an admission the first one was not sound. Employment, tenancy and commercial terminations are taken in turn, each with its own available grounds, notice period and required method of service, followed by the drafting habits that reduce the risk in all three.
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
By the time a termination dispute reaches a lawyer, the letter has already narrowed the argument. Whatever was decided internally, and whatever was said at the meeting, the letter is what a tribunal reads, and the basis it gives is the basis that party then has to defend. A large share of the cases we are asked to take on were made harder by the letter itself — written quickly, by adapting an older one, before anyone had settled what the legal basis for ending the relationship actually was.
Employment contracts, tenancies and commercial agreements are all ended by letter, and each carries its own requirements as to the grounds available, the notice due and the way that notice has to reach the other side. This note takes each in turn, and ends with the drafting habits that reduce the risk in all three.
Related: Our termination letter drafting service covers employment, tenancy and commercial terminations.
Ending an employment contract
Employment onshore is governed by Federal Decree-Law No. 33 of 2021, which replaced Federal Law No. 8 of 1980. A termination letter under it has to do three things at once: identify the legal basis on which the employment is ending, respect the notice the contract provides for, and say something the employer will still be willing to stand behind in front of a court.
That last point is where most employers lose. A letter that gives a vague or a generous reason — restructuring, when the real reason was misconduct — becomes the employer's own evidence when the employee later claims the dismissal was unjustified. A letter that gives no reason at all invites the employee to supply one. And termination for a serious disciplinary reason, which allows an employer to end the relationship without notice, depends on the specific grounds the law recognises and on the employer having actually run a proper investigation before the letter was written, not afterwards.
The letter should also deal with the practical consequences rather than leaving them to be argued about: the last working day, whether notice is being worked or paid in lieu, the treatment of accrued leave, the end-of-service entitlement and how it has been calculated, the return of company property, and the cancellation of the work permit and residence visa. Where a restrictive covenant is intended to survive, silence in the termination letter is not helpful to the employer.
The forum depends on where the employer sits. Onshore, an employee's complaint goes first to the Ministry of Human Resources and Emiratisation, which attempts settlement and refers the matter onwards where it cannot be resolved. Employers in the DIFC and in ADGM are outside that system entirely: each financial centre has its own employment legislation and its own court, and a letter drafted against the federal law may not comply with the applicable one.
Related: We act for employers and employees in wrongful termination and employment disputes onshore and in the financial free zones.
Ending a tenancy
A notice ending a lease is not a document that can be drafted freely. Each emirate's rent legislation sets out the grounds on which a landlord may recover possession or refuse renewal, the notice that must be given, and the manner in which it must be served — in Dubai, service through a notary public or by registered post, rather than by email or by handing it to the tenant at the door.
Notices fail on those formalities far more often than on their substance. A landlord with a perfectly good ground loses because the notice went to the wrong address, was served by the wrong method, was given by an agent without written authority, or stated a ground that does not match what the landlord then did with the property. Because the required period runs from valid service, a defective notice does not merely need correcting; it usually means starting the clock again.
Disputes go to the rental dispute tribunal for the emirate concerned — in Dubai, the Rental Disputes Centre — and not to the ordinary civil courts. Tenants receiving a notice should check the formalities before conceding anything, and landlords should check them before serving. Our tenancy and rental disputes team handles both sides.
Ending a commercial contract
Here the starting point is the contract itself. Most commercial agreements contain a termination clause specifying who may terminate, on what grounds, with what notice, and whether a defaulting party must first be given the chance to remedy the breach. A notice that ignores the cure period, or that terminates for a breach the clause does not cover, is itself a breach — and the party that thought it was exiting cleanly ends up as the defendant.
Where the contract is silent or ambiguous, the Civil Code and Federal Decree-Law No. 50 of 2022 on Commercial Transactions supply the framework, including the requirement that contractual rights be exercised in good faith. Two consequences follow that are worth knowing before sending anything. Onshore courts will look closely at whether the terminating party gave the other side a genuine opportunity to perform. And a termination that is later found to be wrongful exposes the terminating party to a claim for the counterparty's loss, which in a long-term supply or distribution relationship can be considerably more than the sum in dispute.
Terminations that involve money already held — retentions, advance payments, escrowed sums, performance bonds — need to say expressly what happens to those funds. Where they do not, the release of the money becomes a separate dispute after the contract has ended, which is the pattern behind most escrow and payment disputes we are asked to resolve.
What the three have in common
- State the basis, and state the right one. The ground given in the letter is the ground the party will be held to. Changing it later is treated as an admission that the first one was not sound.
- Serve it the way the law or the contract requires. Method and address are not formalities to be worked around. A well-drafted notice served by the wrong route is ineffective.
- Keep proof of delivery. Courier receipt, notary record, registered post, or the acknowledgement clause the contract provides. Disputes about whether notice was received are common and entirely avoidable.
- Deal with the consequences in the same document. Final payments, return of property or the premises, confidentiality, and what survives termination.
- Have it read before it is sent. A letter is cheap to review and expensive to withdraw. Once served, it has fixed the position of the party that sent it.
Related Services: Explore our Termination Letter drafting and review service for employment and commercial terminations in the UAE.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.
Nour Attorneys Team
