How Notice Shortfall Is Deducted From a UAE Final Settlement
October 23, 2026
When an employee doesn't serve their full contractual notice period (set between 30 and 90 days under Article 43), the shortfall in days is commonly deducted from the final settlement, valued at the employee's daily wage.
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Required notice: 45 days. Days actually served: 30. Shortfall: 15 days. Monthly basic salary: AED 11,000, daily wage AED 366.67.
- Deduction: 15 × 366.67 = AED 5,500, subtracted from the final settlement total
Mutual Waiver Avoids the Deduction
Since the notice period can be reduced or waived by mutual written agreement between employer and employee, a shortfall deduction can be avoided entirely if both sides agree in writing to a shorter notice period or an earlier exit date — the deduction specifically applies when notice is shortened unilaterally, not by mutual consent.
Frequently Asked Questions
How is a notice shortfall calculated?
Required notice days minus days actually served, multiplied by the employee's daily wage.
What's the deduction for a 15-day shortfall at AED 11,000 basic salary?
AED 5,500 (15 days × AED 366.67 daily wage).
Can this deduction be avoided?
Yes — if both employer and employee mutually agree in writing to reduce or waive the notice period, there's no shortfall to deduct.
Does this deduction apply to employer-initiated shortfalls too?
The underlying notice obligation applies to both parties under Article 43, so an employer failing to give proper notice can create liability in the other direction as well.