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Coronavirus and Labour: Can Employers Terminate Contracts Abruptly?

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Staff Writer, TLR

Published on July 14, 2023, 17:40:59


corona virus, workers

The COVID-19 outburst and the uncertainty which comes with it have cast a shade of fear over the stability of employment of a good deal of labourers, mostly expats, in the UAE. Many employers might not be doing the right thing, and it is pertinent to address employee concerns surrounding arbitrary dismissal from work, unpaid leaves, salary cuts etc, lest they may be exploited by employers. This article delves into the rights of the employees in such scenarios. 

At the outset, it may be noted that there were no specific legal provisions legislated during COVID-19 so far, in the UAE, on these matters. However, the provisions of the existing Federal Law no. 8 of 1980 (as amended), also referred to as the 'Labour Law', has provisions surrounding arbitrary dismissal and so on. 


General Benefits Available to the Employees


Employees must note that in Abu Dhabi and Dubai, there are compulsory Health Insurances that should be availed for employees. This applies to the employees alone in Dubai and applies to employees and their families in Abu Dhabi. In case of death or injury during the course of work, the employees are entitled to be given compensation equal to 24 months of salary, which shall not be less than 18,000 AED and not greater than 35,000 AED. 

Furthermore, if an employee is terminated, or fired, he/she is entitled to end of service benefits as per their service period. If the employee has worked between 1 to 3 years, the benefits shall include 1/3rd of the Basic Salary for 21 days per year. The employees possessing 3 to 5 years of service shall have the right to 2/3rd of the same amount and, service periods exceeding 5 years will receive the complete basic salary for 21 days per year of service. These provisions apply to a termination, which is completely legal and non-arbitrary.


Legal Consequences of Arbitrary Dismissal, Salary Cuts and Unpaid Leaves


Employers may try terminating, slashing salaries, or forcing employees to take unpaid leaves in this pandemic situation. However, employees have rights that need to be respected. Employees are to abide by their legal obligations and due process of notice if they are to unilaterally terminate employment contracts. 


Termination: The employer, while having rights related to termination as per the existing labour law, must also understand the risk of arbitrary dismissal claims and might have to settle employees' dues. So far, COVID-19 has not been considered a valid justification for termination without notice. The reasons for such termination without notice are described under Article 120 of the Labour Law. Article 122 delves into arbitrary termination and defines termination with a malicious intention. If the employee believes he was terminated arbitrarily, he can approach the Ministry of Human Resources and Emiratisation with a complaint. If the initial attempt for an amicable settlement is unsuccessful, the matter will be referred to the concerned courts. Furthermore, if the court finds that the arbitrary dismissal claim is proven, they can order compensation to the employee. In addition to the same, the employee can claim gratuity, notice period dues and any other such applicable dues. 


Unpaid Leaves and Salary Cuts: While employees being forced to avail unpaid leaves are not permitted, the employers may use the precautionary measures mentioned under Article 2 of the Ministerial Decree no. 279 of the year 2020, which was enacted to govern relations between employers and employees during the pandemic situation. "Unpaid Leaves" are one of the five precautionary measures which employers can adopt to stop the spread of the Coronavirus. However, their commitments to the employees, including housing and other benefits not including salaries are to continue until they leave the country or are permitted to work in another company. Furthermore, this law does not apply to Emiratis. However, the employee is given the right to "determine the date of the commencement of the annual leave", as per Article 76 of the Labour Law, which can be availed by the employers to decide that their employees are on annual leave at a period of their choice. However, these are paid leaves. Also, it must be noted that as per Article 90 of the Labour Law, employees cannot be terminated during the leave period. Salary cuts outside the scope of Section 60 of the Labour Law shall entail reimbursement of the rest of the sum. It may be noted that this section is a negative provision which states that no salary reductions can happen unless one of the listed conditions come into effect, and COVID-19 cannot generally be taken as an excuse herein.