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Arbitrary Dismissal in Terms of UAE Labour Law

Arbitrary or unfair dismissal is one of the most common forms of injustice that may be inflicted upon an employee and takes place when an employer terminates an employee or forces such an employee to resign without any justifiable reasons.

Article 113 of the UAE provides that the termination of the employment contract shall be by mutual consent between the parties and in one of the following three cases:

  • Should the parties thereto agree to the termination thereof, provided that the consent of the worker is in writing
  • Should the specified term of the contract expire, unless the contract is explicitly or implicitly extended in accordance with the provisions hereof.
  • Should a party to an employment contract with undetermined term wish the termination thereof, provided that such party abides by the pr47visions hereof related to the notification and the acceptable grounds for the termination of the contract in a non – arbitrary manner.

If an employee feels that he/she has been unfairly dismissed or that his/her manager has violated the terms of Article 120, the employee is permitted to file a complaint directly with the Ministry of Human Resources and Emiratisation (MOHRE), which is the body responsible for the investigation of such complaints and which may in turn also discuss methods of compromise between the employee and the employer.

In the event that MOHRE fails to resolve the matter amicably, it will proceed to refer the dispute to the competent court. Should the court, after considering all the facts and applicable legislation, rule that the employee has been arbitrarily dismissed, the employer will be ordered to pay the appropriate amount of compensation to the employee.

This compensation is based on the type of work, the length of the employee’s service, the manner of dismissal, and the effect thereof on the employee. The compensation amount may not exceed three times the employee’s basic salary, and all bonuses, including the end of service bonus, if not already paid.

Financial Dues after Resignation in the UAE

In accordance with the labour law, an employee has various financial dues after the resignation in the UAE. Each of which shall be reviewed in detail as follows:

End of Service Benefit/ Bonus

  • If the employee resigns voluntarily and without pressure from his manager before the lapse of one year of employment, his right to End of Service Benefits is forfeited in accordance with the UAE Labour Law.
  • In terms of an employee who has worked for a company or establishment for more than 1 year, such employee is entitled to an End of Service Benefit proportionate to the amount of time for which he was employed.
  • The End of Service Benefit is calculated based on the employee’s basic salary. Allowances for items such as housing, transportation, food, travel etc. are not included in the calculation.
  • If there are any amounts due payable by the employee to the employer, the employer may deduct such amounts from the End of Service Benefit

Calculation of the End of Service Benefit/ Bonus

The End of Service Benefit is calculated based on the type of contract concluded between the worker and the employer.

There are 2 types of employment contracts in the UAE, the first being a fixed-term contract, and the second being an indefinite contract.

Fixed-Term/ Limited Contract

If the employee has been employed for more than one year, he/she is entitled to the End of Service Benefit and it is calculated in the following manner:

The minimum period from which to start calculating the End of Service Benefit is one year.

  • If an employee has been employed with the employer for more than 1 year but less than 5 years, he/she will receive 21 days for every year employed as an End of Service Benefit;
  • If an employee has been employed with the employer for more than 5 years, he/she will receive 30 days for every year employed after the first five years as an End of Service Benefit.

Indefinite/ Unlimited Contract

The End of Service Benefit in terms of an indefinite/ unlimited contract is calculated depending on who terminated the contract.

If the employer has terminated the contract, the End of Service Benefit is calculated as follows:

The minimum period from which to start calculating the End of Service Benefit is one year.

  • If an employee has been employed with the employer for more than 1 year but less than 5 years, he/she will receive 21 days for every year employed as an End of Service Benefit;
  • If an employee has been employed with the employer for more than 5 years, he/she will receive 30 days for every year employed after the first five years as an End of Service Benefit. However, this is on the proviso that the total End of Service Benefit does not exceed two years’ salary.

Facing labor ban under limited contract in UAE

However, if the employee terminates the contract, the remuneration is calculated as follows:

The minimum period from which to start calculating the End of Service Benefit is one year.

  • If an employee has been employed with an employer for a period of more than 1 but less than 3 years, the employee will receive one third of the 21-day basic salary for each year employed as an End of Service Benefit.
  • If an employee has been employed with an employer for a period between 3 to 5 years, the employee will receive two-thirds of the 21-day basic salary for each year employed as an End of Service Benefit.
  • If an employee has been employed with an employer for more than 5 years, the employee will receive 21 days for every year employed after the first five years as an End of Service Benefit.

We at HHS Lawyers and Legal Consultants UAE have a team of labor dispute specialists. For inquiries about this service Call us Today!

M. Al Khairy, LL.B. is a Senior Partner of HHS Lawyers in UAE. Practicing law for almost a decade, he has in-depth knowledge on UAE legislation with particular expertise on legal drafting, contract drafting, labor disputes, family law, and regulatory compliance for business organizations. Al Khairy also provides counsel on legal rights and obligations in the UAE to clients, including individuals and businesses subject to investigation or prosecution under Criminal Law by major regulators. Read more