Unfair Termination in the UAE: Legal Protections and Remedies

Introduction

In the United Arab Emirates (UAE), the issue of unfair termination is governed by the Federal Decree-Law No. 33 of 2021 on the Regulation of Labor Relations, which came into force on February 2, 2022. This law outlines the rights and obligations of both employers and employees in the context of employment contracts, particularly when it comes to the termination of employment. Understanding what constitutes unfair termination, and the legal remedies available, is essential for both employers and employees to ensure compliance with the law and the protection of worker rights.

1. What Constitutes Unfair Termination?

Unfair termination refers to the dismissal of an employee in a manner that is unjust, discriminatory, or in violation of labor laws. Under the UAE labor law, an employee cannot be terminated without a valid reason. A termination will be considered unfair if it lacks a justifiable cause or if it is based on unlawful grounds. Some common examples of unfair termination include:

• Dismissal without Just Cause: Termination without providing a legitimate reason related to the employee's work performance or behavior.

• Discrimination: Termination based on race, gender, nationality, religion, or any other discriminatory ground is considered unlawful.

• Retaliatory Termination: If an employee is terminated for filing a complaint against the employer, reporting a violation, or exercising their legal rights, this is deemed unfair.

• Dismissal Due to Illness or Injury: Terminating an employee solely because they are ill or injured, without giving them the appropriate time to recover as prescribed by law, can be considered unfair.

2. Grounds for Lawful Termination

Employers in the UAE are permitted to terminate an employee, but only under specific conditions that must align with the labor law. These include:

• Poor Performance or Misconduct: An employer can terminate an employee if the worker has consistently underperformed, despite being given adequate warnings and opportunities for improvement.

• Breach of Contract: If an employee violates the terms of their contract or the internal regulations of the employer.

• Company Restructuring or Redundancy: Termination due to economic reasons, such as company downsizing, is lawful if handled correctly and without targeting specific individuals unfairly.

The law emphasizes that termination must be done in good faith, and employers must adhere to procedural rules, such as providing notice in accordance with the employee's contract and the law.

3. Procedural Safeguards in Termination

The labor law mandates certain procedural requirements that must be followed when terminating an employee to avoid claims of unfair dismissal:

• Notice Period: Employers are generally required to give notice before terminating an employee. This period is typically between 30 and 90 days, depending on the contract.

• Written Justification: In cases of dismissal for cause, the employer must provide a written explanation outlining the reason for termination.

• Severance Pay: Employees who are terminated unlawfully or without cause may be entitled to severance pay. The amount depends on the length of service, typically calculated at 21 days' salary for each year of service for the first five years and 30 days' salary for each additional year.

4. Legal Remedies for Unfair Termination

Employees who believe they have been unfairly terminated have several legal remedies under UAE law:

• Lodging a Complaint: An employee can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE). The ministry will attempt to mediate between the employer and employee to resolve the issue.

• Compensation for Unfair Termination: If the MOHRE or the court finds that the termination was unjustified, the employee may be entitled to compensation. Compensation can be up to three months' gross salary, in addition to other entitlements such as unpaid wages, end-of-service benefits, and damages.

• Reinstatement: In some cases, an employee may seek reinstatement to their former position if the termination is proven to be in bad faith or discriminatory, though this remedy is not commonly applied.

5. Key Court Decisions and Precedents

The UAE courts have consistently upheld the principle that an employee cannot be terminated arbitrarily. Recent court decisions have emphasized the need for employers to provide substantial evidence when dismissing employees. For example, in one case, the court ruled in favor of an employee who was terminated without adequate notice or explanation, awarding the employee full severance and compensation for unfair dismissal. This highlights the judicial stance on protecting employee rights under the labor law.

6. Special Considerations for Free Zones

Employees working in UAE free zones, such as the Dubai International Financial Centre (DIFC) or the Abu Dhabi Global Market (ADGM), are subject to separate labor laws specific to those jurisdictions. However, the principles governing unfair termination generally align with federal labor law, ensuring that employees in free zones are protected against arbitrary dismissal.

7. Prevention of Unfair Termination

Employers can prevent claims of unfair termination by:

• Ensuring that termination is always based on legitimate and lawful grounds.

• Documenting performance reviews and providing written warnings when necessary.

• Following the correct procedures as set out in the labor law and employment contracts.

For employees, understanding their rights and seeking legal advice before accepting termination can help protect them from exploitation or wrongful dismissal.

Conclusion

The UAE labor law offers comprehensive protection against unfair termination, ensuring that employees are treated fairly and justly in their employment relationships. Both employers and employees must adhere to the legal requirements to avoid disputes and ensure harmonious workplace relations. For employees facing unfair dismissal, legal recourse is available through the MOHRE and the UAE courts, which continue to uphold the principles of fairness and justice in employment matters.