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Employer’s Right to Terminate Employment in the UAE

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Staff Writer, TLR

Published on July 14, 2023, 17:41:00


UAE Laws, Law reporters, Employed Contract, Termination, Arbitrary Dismissal, Grace Period, residence permit, UAE News, VISA, Labour Law, UAE Labour, dismissal, UAE Legal, compensation, Illegal residents, Ministry of Human Resources and Emiratisation

The employment relationship between employers and employees in the UAE is governed by the provisions of Law No. 8 for the year 1981, otherwise known as the ‘Employment Law’.  This relationship is usually regulated by way of a contract of employment that sets out the rights and obligations of each party in light of the provisions of the Employment Law.

Termination of Limited Employed Contract
Except in the case of mutual termination, the limited employment contract may only be ended by the employer when it expires, pursuant to the rules of the Employment Law.
Early termination of a restricted contract is only and entirely permitted when one of the scenarios listed in Article 120 of the Employment Law occurs.
If the employer terminates the employee's contract for reasons other than those specified in the Employment Law, the employer will be considered to have terminated the employee arbitrarily and will be liable to pay the employee compensation equal to three months' salary or the contract's remaining period, whichever is shorter.
As a result, it is correct to argue that the Employment Law has established explicit procedures for the termination of the employer's limited contract.

Termination of Unlimited Contract
When it comes to terminating an unlimited contract, however, there is always some ambiguity – notably among employers.
There are various employment myths that are frequently relied upon, either to the employer's or employee's detriment. One of these fallacies is that an employer can cancel an unlimited employment contract at any time after giving the required notice period, for any reason. This misconception is the result of a misunderstanding of Article 117 of the Employment Law.
"Both the Employer and the Employee may terminate a Contract of Employment for an unlimited period for a justifiable reason at any point following its conclusion by providing the other party notice in fewer than 30 days before the termination," according to Article 117.
If the employee works on a daily basis, the notice time will be as follows:
If the employee has worked for more than six months but less than a year, one week; two weeks if the employee has worked for at least one year; one month if the employee has worked for at least five years."

Termination Without Notice
• By the Employer
In accordance with UAE Labour Law, an employment contract, whether restricted or unlimited, can be cancelled without notice by either side in the following cases:
1. If he/she assumes a fictitious name or nationality, or if he/she presents falsified documents or certificates, he/she will be prosecuted. 
2. Is employed for a probationary period and was terminated during or at the end of that period.
3. Makes an error that causes the employer substantial material loss, provided that the latter notifies the labour department of the occurrence within 48 hours of becoming aware of it.
4. Infringes on instructions concerning the safety of the place of business, provided that such instructions are posted in prominent areas or communicated verbally to an illiterate employee.
5. Discloses any secrets about the company where he/she works.
6. Is given a definitive judgement by a competent court for an offence that jeopardises honour, honesty, or public values
7. Is discovered intoxicated or under the influence of banned drugs during working hours
8. During the course of his/her employment, assaults the employer, the manager, or any of his co-workers.
9. Without a valid cause, he/she is absent for more than 20 days in a row or for more than 7 days in a row in a year.
10. Notwithstanding a formal investigation with him/her in this regard and a warning of dismissal if the same thing happens again, he/she fails to perform basic duties under the employment contract and continues to violate them.

• By the Employee
An employee has the right to terminate an employment contract without giving notice if the following conditions are met:
1. The employer has breached his/her legal or contractual commitments to the employee (for example, if the employer fails to pay wages for a period exceeding 60 days)
2. The employee has filed a lawsuit against an employer who has failed to secure the worker's employment (for example, in case of a business shutdown or if the business has been inactive for a period exceeding two months).
3. The worker wins the final verdict in a labour complaint referred to the labour court by MoHRE.

Arbitrary Dismissal
When an employer fires an employee or forces him/her to resign for no cause, this is known as arbitrary or unfair dismissal.
Arbitrary termination of an employee occurs when an employee is fired for reasons unrelated to work performance, or when an employee makes a lawful complaint against an employer, causing the latter to terminate him/her maliciously, according to Article 122 of the UAE Labour Law. Article 120 of the UAE Labour Code specifies the circumstances under which a termination without notice is permissible.
If an employee believes he was fired unfairly, he can file a complaint with the Ministry of Human Resources and Emiratisation. The ministry will make every effort to reach an amicable solution to the problem. If no agreement can be reached, the case will be referred to the appropriate court.
If arbitrary dismissal is confirmed, the court will force the employer to compensate the employee, according to Article 123 of the UAE Labour Law. The value of compensation will be determined by the court based on the type of job, the level of the employee's damages, and the length of employment.
In all situations, the amount of compensation shall not exceed the employee's wage for a three-month period, computed on the basis of the worker's most recent wage.
In addition to compensation, the employee can sue his company for his gratuity, notice period dues, and any other outstanding dues.

Grace Period
After an employment contract is terminated and a work visa is cancelled, the terminated employee is given a 30-day grace period from the date of cancellation to either get a new residence permit or depart the country. Illegal residents may face fines or deportation.

Finally, it is true that an employer's authority to terminate an unlimited employment contract is conditional on the employer providing valid reasons for termination. As a result, it is critical to examine the Employment Law provisions in their entirety rather than relying on one item in isolation from another.

By Khushi Saxena

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