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UAE Unjust Dismissal: Employee Compensation

On February 2, 2022, the United Arab Emirates implemented the revised labor legislation, Federal Decree-Law No. 33 of 2021, which regulates labor relations. This updated law encompasses a range of regulations that employers in the private sector are required to adhere to.

Within this legislation, Article 47 deals with the circumstances surrounding an employee’s arbitrary termination. This particular article focuses on protecting workers’ rights in cases where their employer terminates their employment without a valid and justifiable reason. According to the new labor law, if an employee can substantiate an arbitrary dismissal by complaining to the Ministry of Human Resources and Emiratization (MOHRE) and if the Ministry validates the complaint, the employee is entitled to receive compensation for the unjust termination.

Let’s now explore the provisions within the new labor law that outline the appropriate steps to be taken in response to unjust termination by an employer.

What constitutes Arbitrary Dismissal?

Under Article 47, if an employee’s contract is terminated by an employer as a result of the employee lodging a complaint with the Ministry of Human Resources and Emiratization (MoHRE) or initiating legal action against the employer, and if the validity of such actions is established, this termination is deemed unlawful.

Employees who believe they have been unjustly dismissed have the option to file a complaint with the Ministry of Human Resources and Emiratization. The Ministry will strive to resolve the issue through diplomatic means. If an amicable resolution is unattainable, the matter will be referred to the appropriate court.

In cases where arbitrary dismissal is proven, the court will require the employer to provide compensation to the employee. The compensation amount will be determined by taking into account various factors. It is essential to note that the compensation awarded should not surpass the equivalent of three months’ worth of the employee’s last entitled salary. Additionally, the employee retains the right to claim their end-of-service gratuity, any outstanding notice period payments, or any other unpaid entitlements from their employer.

Article (47) Arbitral Dismissal: Legal Provision Recap

In the event of an employee’s termination by their employer, it shall be considered unjustified if the employee files a significant complaint with the Ministry or successfully pursues legal action against the employer, thereby substantiating the legitimacy of their claim.

Should the termination be deemed unjustified, as detailed in paragraph (1) above, the employer is obliged to furnish the employee with equitable compensation as determined by the competent Court. This compensation shall be computed taking into account the following factors:

1. The nature of the job,
2. The extent of the harm endured by the employee
3. The duration of their tenure with the company.

However, it’s important to note that the compensation shall not exceed the equivalent of three months’ wages based on the employee’s most recent salary.

The provisions outlined in paragraph (2) above in no way diminish the employee’s entitlement to receive payment instead of notice and severance pay, as specified in the pertinent clauses of this legislation.

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Employee Termination without Notice by the Employer

By Article 44 of the UAE Labour Law, the employer has the authority to terminate an employee’s contract without prior notice under specific circumstances. These circumstances encompass:

1. Falsification of identity or the presentation of forged documents or certificates by the employee.

2. The employee’s deliberate actions leading to significant financial losses for the employer or intentional damage to the employer’s property, with an acknowledgement of their wrongdoing. The employer is required to notify the Ministry of Human Resources and Emiratization (MOHRE) within seven working days of becoming aware of the incident.

3. Violation of safety instructions, whether conveyed in writing or verbally to illiterate employees, concerning the welfare of workers and the workplace.

4. Failure to fulfill fundamental obligations as stipulated in the employment contract, persistently violating them despite receiving two prior dismissal warnings for the same offense.

5. Unauthorized disclosure of confidential information related to the establishment, resulting in financial losses or missed opportunities for the employer or personal gain from the disclosed information.

6. Discovery of the employee being intoxicated or under the influence of illegal substances during working hours or engaging in actions within the workplace that breach public morality.

7. Physical assault by the employee on the employer, manager, or colleagues while performing their job duties.

8. Unexplained and prolonged absence from work without a valid reason, exceeding 20 intermittent days or more than seven consecutive days within a year.

9. Unlawful exploitation of their position by the employee for personal benefits and gains.

10. Joining another establishment without adhering to the applicable rules and procedures governing such matters.

You may also read Unjust Termination of an Employee in the UAE

Legal Recourse for Arbitrary Dismissal:

In the event of a perceived arbitrary dismissal, employees possess the prerogative to contest their termination. They hold the option to submit a formal grievance to the Ministry of Human Resources and Emiratization (MOHRE) within a designated timeframe. Subsequently, the MOHRE will undertake an inquiry into the grievance and endeavor to resolve the matter through mediation or conciliation. If the employee’s grievance remains unresolved through these means, they retain the right to pursue legal measures. This involves initiating legal proceedings in the labor courts, wherein the presented evidence from both parties will be scrutinized. If the Court ascertains that the dismissal was indeed arbitrary, it may compel the employer to reinstate the employee or provide suitable compensation.

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