What the law says about unfair dismissals

UAE Labor Law

Last Updated on April 26, 2023 by user

What the law says about unfair dismissals

Employment isn’t always sunshine and rainbows. Work contracts can end in many ways, and it’s important to know what is legal termination and what is not. Unfair dismissals in the UAE are clearly defined by the Labor Law, protecting both employers and employees. 

What is unfair or arbitrary dismissal?

First, it is vital to determine what unfair or arbitrary dismissal is to know how to protect your rights. It’s essential to remember that you might not have a case for an arbitrary dismissal just because you think your boss didn’t have grounds to end your job contract.

Generally, unfair dismissal in the UAE Labor Law is when the employer doesn’t have the legal right to end the contract. UAE Labor Law also states that a release can be classed as arbitrary dismissal if the employer terminates the contract due to the employee filing a legitimate complaint with the Ministry of Human Resources and Emiratisation (MoHRE) or a lawsuit against the employer.

What is UAE’s law about termination?

The UAE Labor Law is clear about the situations in which an employment contract may be terminated. The most common of these are:

  • The term of the contract expires or isn’t extended
  • Both the employer and employee mutually agree in writing to end it
  • Either party observes the termination of the employment conditions and follows through with the notice period
  • In the event of the employee’s death or complete permanent inability to work

Article 44 of the UAE Labor Law also establishes rules for terminating a contract without notice under certain conditions. These apply to situations where the employee has used false identity or forged documents or certificates related to obtaining employment. It can also apply in cases where the employee commits an error that causes substantial material loss to the employer. 

According to Article 122 of the UAE Labor Law, A worker’s service shall be deemed to be arbitrarily terminated by his or her employer if the reason for termination is irrelevant to the work”. This is applicable to a few situations:

  • Alleged poor performance: If the reason for termination is due to poor performance, the employer is obliged to legally provide prior notice or take lawful disciplinary actions before initiating the termination process.
  • Forcefully Transferred: If an employer forcefully transfers or demotes an employee with lower pay, this is considered unfair and illegal according to the Ministry of Labor.
  • Coerced Resignation: An employer is not allowed to force an employee to resign by issuing threats or claiming performance-related issues.

A legal dismissal should always follow the procedures and regulations set by the UAE Labor Law and mentioned above. Unfair dismissals in the UAE are those that do not follow these steps. The Ministry of Labor in the UAE has clearly dictated how a disciplinary procedure should be conducted. An employer has the right to impose legal penalties on its employees only if the following conditions below are met.

  • The employee must be notified about the allegations made against him/her in writing.
  • The employee is given the opportunity to defend the allegations.
  • A thorough investigation is to be conducted by the employer into the defense provided by the employee.

If an employer fails to comply with any of these conditions, the final disciplinary penalty could be found by the Labour Courts to be unjustified, irrespective of the employee’s poor performance or conduct.

What are the rights of the worker in the event of unfair dismissal?

An employee has the right to file a complaint to the Ministry of Labor if he or she feels that the grounds on which their termination took place were unjustified. The matter will be taken to court, and a decision will be made based on facts and evidence. The court can then decide the compensation that would be given to the employee, which does not exceed the amount equivalent to three months of the employee’s salary.

How to terminate Limited & Unlimited Contracts in the UAE

To avoid the penalties of unfair dismissal, employers should be careful when terminating employee contracts. The termination process varies slightly between limited and unlimited contracts. 

Terminating a limited contract

A limited contract does not exceed a 2-year term period and requires a notice period of at least 1 month and up to 3 months. It can be terminated by either the employee or the employer if the following conditions are met:

  • Inform in writing at least 1 month in advance, no more than 3 months in advance
  • Honor the contract for the duration of the notice period
  • Compensate the employee as agreed by both parties, given that this does not exceed the equal of 3-month gross wages

A limited contract can be terminated if the contract expires and is not renewed, both parties agree to end the contract mutually, or the employee violates the UAE labor law. When released, the employee has a 30-day grace period from the date of cancellation to either obtain a new visa or leave the UAE.

Terminating an unlimited contract

Unlimited contracts have a start date but not an end date. They can be removed by either the employee or the employer. The notice period remains the same as limited contracts, and the employee must honor the contract for the duration of the notice period.

Unlimited contracts can also be terminated singly by any one of the parties without obeying the notice period requirements. In such a case, the terminating party must bear the legal consequences of early termination. Once the contract is terminated, the employee is granted a 30-day grace period from the date of cancellation to either obtain a new visa or leave the country.

What is the procedure for filing a complaint of unfair dismissal?

If you suspect your employer has dismissed you unfairly, then you can complain to MoHRE. The Ministry will always try to solve the situation amicably, but if this doesn’t happen, the case will move to the respective court. 

If the arbitrary dismissal is proven in court, then the employer must pay compensation to the employee. The compensation depends on the type of work, the damage caused to the employee due to the dismissal and the duration of the employment.

The bottom line

It’s essential to understand how contract termination works in the UAE. If you don’t, you might end up with a lengthy court case and a hefty compensation bill. You should understand how termination limited or unlimited contract works, how to pay gratuity pay for the employee, and what your rights are if employees are not following their end of the contract. 

For employees, it’s also vital to know your rights. You should consider filing a complaint if you feel your employer hasn’t followed the legal procedures set by the UAE Labor Law. The truth is that unfair dismissals in the UAE can be harmful to all parties.