Garden Leave Letter (UAE)

A Garden Leave Letter in the UAE is a formal written notice issued by an employer to an employee who has either resigned or been given notice of termination, confirming that the employee is required not to attend the workplace during the remaining notice period while continuing to receive full salary and contractual benefits. The term 'garden leave' originates in English employment law and refers to the employee being sent home — metaphorically to tend the garden — during the notice period, to prevent them from using the remaining weeks to entrench client relationships before joining a competitor or setting up a rival business.

The UAE does not have a specific statute governing garden leave by name, but the mechanism is achievable and enforceable under Federal Decree-Law No. 33 of 2021 (the UAE Labour Law) and Cabinet Resolution No. 1 of 2022, provided two conditions are met. First, the employment contract must include a garden leave provision authorising the employer to direct the employee not to attend work during the notice period. Second, the employer must continue to pay the employee's full basic salary and contractual benefits throughout the garden-leave period; withholding pay during garden leave would constitute a breach of contract and potentially grounds for the employee to resign without notice under Article 45 of the Labour Law. In the Dubai International Financial Centre (DIFC), DIFC Employment Law No. 2 of 2019 expressly recognises garden leave arrangements, giving DIFC employers a statutory foundation for the mechanism that mainland employers derive from contractual freedom.

The garden leave period runs concurrently with — not in addition to — the contractual notice period. Article 43 of the Labour Law caps the maximum notice period for terminating a limited-term contract at 90 days. A garden-leave letter that purports to add the garden-leave period on top of the notice period would extend the notice beyond the Article 43 maximum. In practice, senior employees subject to garden leave are typically on 90-day notice periods, so the garden leave runs for up to 90 days from the employer's direction, ending on the last day of the notice period.

Garden leave is most commonly used in the UAE for senior executives, relationship managers in financial services, sales professionals with access to client databases, traders with knowledge of proprietary trading strategies, and technical specialists with access to trade secrets or unreleased product plans. The DIFC financial-services sector — regulated by the Dubai Financial Services Authority (DFSA) — and the ADGM financial sector — regulated by the Financial Services Regulatory Authority (FSRA) — regularly see garden leave arrangements in executive service agreements. The Central Bank of the UAE's Remuneration Standard for banks requires certain senior functions to have deferred variable pay and claw-back provisions, and garden leave dovetails with these requirements by keeping the departing executive on the payroll during the deferral and notice period.

The garden leave letter itself is both a contractual notice and a practical instruction document. It confirms the start and end of the garden leave period, revokes access to company IT systems and premises, prohibits contact with clients and counterparties, specifies the handover requirements before garden leave begins, and addresses annual-leave accrual and the employer's obligation to settle all dues within 14 days of the last employment day under Article 53 of the Labour Law. A well-drafted letter reduces the risk of the employee claiming constructive dismissal or breach of contract by making the terms of the garden leave arrangement clear and legally compliant.

A UAE Garden Leave Letter is needed whenever an employer in the United Arab Emirates wishes to exercise a contractual garden-leave provision following the commencement of a notice period, whether triggered by the employee's resignation or by the employer's notice of termination.

The most common situations in which a garden leave letter is issued in the UAE are as follows. First, senior executive departures: when a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, or Managing Director resigns to join a competitor or to set up a rival enterprise, the employer needs to protect client relationships, confidential pricing information, pipeline data, and strategic plans during the transition. A garden leave letter, backed by a contractual provision in the executive service agreement, achieves this by keeping the departing executive away from the business for the full notice period.

Second, financial-services transitions: relationship managers at banks regulated by the Central Bank of the UAE, fund managers in the DIFC, and insurance brokers or underwriters in the DIFC and on the mainland have direct access to client portfolios, trading strategies, and confidential deal information. When these employees resign to join a rival institution, a garden leave letter issued on the first day of the notice period prevents the employee from using the remaining notice days to solicit clients or move accounts.

Third, post-M&A role eliminations: after a merger or acquisition involving UAE entities under Federal Decree-Law No. 32 of 2021 (the Commercial Companies Law), senior employees whose roles are eliminated during integration are sometimes placed on garden leave rather than required to continue in a diminished role while searching for alternative employment within the organisation.

Fourth, terminations in contentious circumstances: where the employer has concerns about the employee's conduct but is not proceeding on the grounds for summary dismissal under Article 44 of the Labour Law, placing the employee on garden leave removes the practical problem of the employee continuing to work alongside colleagues while under investigation or during a performance-exit process.

Fifth, DIFC and ADGM regulated persons: DFSA and FSRA-regulated individuals in the DIFC and ADGM who are subject to fitness-and-propriety requirements may be placed on garden leave while a regulatory notification process is completed, to avoid the individual taking action in a regulated capacity during the review period. The garden leave letter confirms the restriction and protects the employer from regulatory liability.

The letter must be issued promptly, ideally on the same day the notice period begins, to be effective. A delay in issuing the garden leave instruction allows the departing employee to continue business activities that the employer wished to prevent.

A UAE Garden Leave Letter must contain the following elements to be effective under Federal Decree-Law No. 33 of 2021 and — where applicable — DIFC Employment Law No. 2 of 2019. The forms-legal.com UAE Garden Leave Letter template is structured to cover each element in clear, unambiguous language.

Identification of parties and employment context must state the employer's full legal name, the employee's full name, job title, and Emirates ID or passport number, and the date the letter is issued. The letter should confirm the employment relationship and cross-reference the employment contract or executive service agreement that contains the garden-leave provision.

Notice period and garden leave period must state the start and end of the notice period, the total notice period (consistent with the contractual and statutory requirement of 30 to 90 days under Article 43 of the Labour Law), and the date from which the garden leave begins. Where the employee is required to attend a handover period before garden leave commences, the letter should state the handover period and when garden leave starts. The garden leave end date should equal the last day of employment.

Continued remuneration and employment status must confirm explicitly that the employee remains employed throughout the garden leave period and continues to receive the monthly basic salary and all contractual benefits. This is both a legal requirement (to avoid constructive dismissal) and a practical protection for the employer (an employee who is not paid during garden leave may claim the restriction is a penalty and not enforceable).

Restrictions during garden leave must identify: (i) revocation of access to company premises, IT systems, email, and databases; (ii) prohibition on contact with clients, suppliers, and counterparties; (iii) prohibition on working for or assisting a competitor during the notice period; (iv) continuation of confidentiality duties under the employment contract and Federal Decree-Law No. 45 of 2021 on the Protection of Personal Data; and (v) any other restrictions relevant to the specific role.

Handover requirements should specify the deliverables, the timeline, and the person or team to whom handover is directed. Handover is typically required in the first few days of the notice period, before garden leave takes effect. Failure to complete handover may affect the final settlement if property or information has not been returned.

Annual leave during garden leave should confirm whether the employer is requiring the employee to take accrued annual leave during the garden leave period (as Article 29 permits the employer to direct leave timing) or whether the accrual will be paid out on termination. This has a direct effect on the final settlement calculation.

Final settlement and return of company property must state the employer's obligation to settle all dues within 14 days of the last day of employment under Article 53 of the Labour Law, identify the property to be returned, and confirm the end-of-service gratuity entitlement under Article 51.

Completing a UAE Garden Leave Letter requires reference to the employment contract to confirm the garden-leave provision exists, and to the notice and final-settlement obligations under Federal Decree-Law No. 33 of 2021.

Start with the date and party details. Enter the date the letter is issued — this should typically be the same day the notice period begins. Enter the employer's full legal name, the employee's full name, current job title, and Emirates ID or passport number. These details should match the MOHRE-registered employment contract.

For the notice and garden leave period, enter the date on which the notice period commenced. This is either the date the employee's resignation letter was received (for resignation) or the date the employer issued the notice of termination. Calculate the last day of employment from the commencement date and the contractual notice period, ensuring the total period does not exceed 90 days under Article 43 of the Labour Law. Enter the garden leave start date — either the same as the notice period start (if immediate garden leave) or a few days later to allow for handover.

Select the reason the notice period was triggered. This is important because it affects how MOHRE and the courts will characterise the settlement: if the employee resigned, the employer is accommodating the departure; if the employer gave notice, the employer is managing the exit.

Enter the monthly basic salary. This amount continues to be paid throughout the garden leave period and must be paid through WPS under Ministerial Decree No. 788 of 2009.

For the conditions section, confirm whether IT and system access has been revoked (select yes/no) and whether client contact is prohibited (yes/no). These are the two most important protective measures. Confirm whether a handover period is required before garden leave commences, and if so, the duration. For annual leave, select whether the employer is directing the employee to take accrued leave during garden leave, or whether it will be paid out on termination.

For the final settlement section, confirm whether end-of-service gratuity applies (it will apply unless the employee was dismissed for gross misconduct under Article 44), and list all company property to be returned. The employer must plan to settle all dues — basic salary for the notice period, accrued leave, and gratuity — within 14 days of the last employment day. Both employer and employee should sign the letter, with the employee's signature acknowledging receipt.

Garden Leave Letter (UAE) — Legal Requirements. Federal Decree-Law No. 33 of 2021 (the UAE Labour Law) and Cabinet Resolution No. 1 of 2022 govern the notice and termination framework within which garden leave operates.

Article 43 of the Labour Law requires a notice period of between 30 and 90 days for termination of a limited-term contract, applying equally to both employer and employee. The garden leave period cannot extend the notice period beyond the contractual and Article 43 maximum. Article 43 also confirms that the employee is entitled to continued full salary and benefits during the notice period; garden leave does not reduce this entitlement.

Article 44 governs summary dismissal without notice: an employer who places an employee on garden leave rather than summarily dismissing is not making use of Article 44, and the employee retains all notice-period entitlements. Article 45 entitles an employee to resign without notice if the employer fails to meet fundamental obligations, including payment of wages; garden leave that stops salary payment would give the employee grounds to resign under Article 45 while keeping full entitlements.

Article 29 permits the employer to direct the timing of annual leave, subject to operational requirements and the requirement to give the employee adequate notice. An employer may require the employee to take accrued annual leave during the garden leave period, reducing the accrued-leave payout on termination. Article 51 governs end-of-service gratuity on the basic salary. Article 53 requires all dues to be settled within 14 days of the Termination Date.

For DIFC employers, DIFC Employment Law No. 2 of 2019 expressly permits garden leave arrangements, and the DIFC Courts will enforce them provided the employer continues to pay full salary and benefits. For ADGM employers, ADGM Employment Regulations 2019 apply on the same basis. Data protection during garden leave is governed by Federal Decree-Law No. 45 of 2021 (mainland) or DIFC Data Protection Law No. 5 of 2020 (DIFC). The employer must handle the employee's personal data lawfully and must not use the employee's data for any purpose connected with the garden leave restrictions.

UAE Garden Leave Letter — Common Mistakes. Garden leave in the United Arab Emirates is an enforceable mechanism when properly structured, but poorly drafted letters or misapplied restrictions generate disputes before MOHRE, the Federal Labour Court, and the DIFC Courts.

1. Issuing a garden leave letter without a contractual garden-leave provision. An employer who directs an employee not to attend work without a contractual right to do so may face a constructive dismissal claim. The garden leave provision must be in the employment contract or executive service agreement before the notice period begins. A letter issued without that foundation is unenforceable.

2. Stopping salary or benefits during garden leave. An employer who withholds salary during garden leave provides the employee with grounds to resign without notice under Article 45 of Federal Decree-Law No. 33 of 2021 (failure to pay wages) while retaining all entitlements, defeating the purpose of the garden leave. Full salary and benefits must continue throughout the period.

3. Treating garden leave as an extension of the notice period. Garden leave runs concurrently with the notice period; it does not add additional time. A letter that appears to impose garden leave after the notice period has expired — effectively extending the employment — will not be enforced.

4. Failing to return to annual leave accrual. Employers who forget to address annual-leave accrual during garden leave may face a final settlement calculation that includes a large accrued-leave payment they did not anticipate. Address the leave position in the letter, either by directing mandatory leave or by confirming accrual and payout.

5. Prohibiting all post-garden-leave activities without a separate non-compete clause. Garden leave restrictions end on the last day of employment. Post-employment restrictions require a separate non-compete or non-solicitation clause in the employment contract satisfying Article 10 of the Labour Law (maximum two years, proportionate scope). A garden leave letter that purports to extend prohibitions beyond the Termination Date without a separate non-compete clause in the contract is unenforceable.

6. Failing to settle dues within 14 days. Article 53 of the Labour Law requires the employer to settle all dues — including gratuity, accrued leave, and any unpaid salary — within 14 days of the Termination Date. A garden leave arrangement that delays settlement is a Labour Law breach triggering MOHRE enforcement.