When Can A UAE Employee Challenge Dismissal And Claim Compensation For Unlawful Termination Under Labour Law?

UAE employees can challenge unlawful dismissal through MoHRE, with compensation potentially reaching three months’ last salary in cases covered by Article 47.

 

Employees in mainland UAE companies who lose their jobs may be able to challenge the termination if it breaches the protections provided under the UAE Labour Law. However, simply being dismissed without what an employee considers a satisfactory explanation does not, by itself, automatically make the termination an unlawful or arbitrary dismissal under the law.

 

The employment relationship of workers in the UAE private sector is principally governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, together with its implementing regulations and subsequent amendments. The law provides a framework for terminating employment contracts, while also protecting employees against dismissal in circumstances that are specifically recognised as unlawful.

 

One of the key provisions is Article 43, which allows either party to terminate an employment contract for a legitimate reason, provided the other party is given written notice. The notice period must generally be between 30 and 90 days, as agreed in the employment contract.

 

During the notice period, the employment contract remains in force and the worker is generally entitled to the agreed salary. Where the required notice is not observed, the party responsible for the breach may be required to pay compensation equivalent to the worker’s wage for the full notice period or the remaining part of it.

 

This means that an employer does not necessarily have to retain an employee until the original contractual end date simply because the employee has not committed misconduct. An employment contract may be terminated in accordance with the legal requirements, including the applicable notice provisions.

 

The position is different where the circumstances of the dismissal fall within Article 47 of the Labour Law.

 

When Dismissal Can Be Considered Unlawful

 

Article 47 deals specifically with what the law describes as unlawful termination of a worker’s service. It provides protection where an employee is dismissed because the employee has submitted a serious complaint to the Ministry of Human Resources and Emiratisation, or has filed a lawsuit against the employer and the validity of that complaint or lawsuit has been established.

 

The provision is important because it is aimed at preventing an employer from retaliating against an employee for legitimately exercising legal rights.

 

Therefore, an employee who is dismissed shortly after making a genuine labour complaint or pursuing a valid legal claim may have grounds to challenge the termination if there is evidence that the dismissal was connected to that action.

 

At the same time, the existence of a labour complaint or court case does not automatically mean that every subsequent dismissal is unlawful. The circumstances and evidence surrounding the termination remain important. The employee would need to establish that the dismissal falls within the circumstances covered by Article 47.

 

This distinction is particularly relevant because the expression “arbitrary dismissal” is sometimes used more broadly in everyday discussions about employment disputes. Under the current law, however, Article 47 provides a specific statutory test for unlawful termination.

 

What Compensation Can Be Awarded?

 

Where a competent court finds that a dismissal was unlawful under Article 47, the employer may be ordered to pay fair compensation to the employee.

 

The law does not prescribe an automatic fixed amount. Instead, the competent court determines the compensation after considering factors including the nature of the employee’s work, the extent of the harm suffered and the length of the employee’s service.

 

There is, however, a statutory ceiling. Compensation for unlawful dismissal under Article 47 cannot exceed the employee’s wage for three months, calculated on the basis of the last salary received.

 

The three-month limit is therefore a maximum rather than an automatic entitlement. An employee who succeeds in establishing unlawful dismissal cannot assume that the court will award three months’ salary in every case. The amount depends on the circumstances and the assessment of the competent authority or court.

 

Importantly, compensation for unlawful dismissal is not intended to replace other employment entitlements.

 

Article 47 expressly provides that the compensation does not prejudice the employee’s right to notice-period pay and end-of-service benefits payable under the Labour Law.

 

An employee may therefore have separate claims for unpaid salary, notice-period compensation, end-of-service gratuity and other amounts that became due when the employment relationship ended.

 

How Employees Can Raise A Labour Complaint

 

An employee who believes that an employer has violated the Labour Law can first approach the Ministry of Human Resources and Emiratisation.

 

The ministry provides channels through which workers can register labour complaints without necessarily having to begin proceedings directly before a court. Once a complaint is submitted, the ministry examines the dispute and attempts to facilitate an amicable settlement between the parties.

 

Employees should preserve documents that may be relevant to their claim. These can include the employment contract, termination letter, salary records, correspondence with the employer, records of complaints previously submitted, performance documents and any other material that may help establish the circumstances surrounding the dismissal.

 

Maintaining a clear documentary record can be particularly important in disputes where the employee alleges that the stated reason for termination was different from the actual reason.

 

MOHRE's current complaint procedure provides for an initial attempt to resolve the dispute through communication between the parties. The ministry says a representative will contact the parties within the applicable process to examine the dispute and determine whether it can be settled.

 

The Labour Claims and Advisory Centre can also provide assistance to workers and employers dealing with employment disputes.

 

What Happens If The Dispute Is Not Settled?

 

The dispute-resolution system has been strengthened in recent years, giving MoHRE greater authority to determine certain employment disputes without requiring every case to proceed through the courts.

 

Under the current framework, MoHRE can issue a final decision in a labour dispute where the value of the claim does not exceed Dh50,000. The ministry may also issue a final decision where the parties fail to comply with an amicable settlement decision, regardless of the value of the claim.

 

A party dissatisfied with such a final decision may challenge it before the competent Court of Appeal within 15 working days of being notified of the decision. The ministry's decision is treated as an enforceable decision subject to the applicable procedures, although an appeal suspends its implementation until the court determines the matter.

 

Where the disputed claim exceeds Dh50,000 and an amicable settlement cannot be reached, MoHRE refers the dispute to the competent court. The referral is accompanied by a memorandum setting out the dispute, the arguments of the parties and the ministry's recommendations.

 

This means an employee does not ordinarily have to bypass MoHRE and immediately commence a court action in order to pursue a private-sector labour dispute.

 

What An Employee Should Check After Dismissal

 

An employee who receives a termination notice should first examine the reason given by the employer and the notice period provided.

 

If the employer has terminated the contract in accordance with Article 43 and the contractual notice requirements, the termination will not necessarily amount to unlawful dismissal simply because the employee disagrees with the decision.

 

The situation requires closer examination if the termination follows a serious labour complaint or a valid legal action against the employer. In such circumstances, the timing of the dismissal, the contents of correspondence and the history of the dispute may become relevant in determining whether Article 47 applies.

 

Employees should also check whether all financial entitlements have been settled. These may include salary up to the termination date, payment relating to the notice period where applicable, accrued leave entitlements, end-of-service benefits and any other contractual or statutory dues.

 

The employer is generally required to pay the worker’s wages and other end-of-service entitlements within 14 days from the end of the employment contract.

 

The Key Protection Under UAE Labour Law

 

The UAE Labour Law therefore draws an important distinction between a lawful termination of employment and a dismissal that is unlawful because it is linked to the employee exercising protected legal rights.

 

An employee cannot necessarily claim arbitrary-dismissal compensation simply because the employer ended the employment relationship or because the employee considers the reason unfair. The circumstances surrounding the termination must fall within the protection provided by Article 47.

 

Where that protection applies and unlawful dismissal is established, the employee may seek fair compensation of up to three months’ last salary, while retaining the right to claim other statutory employment dues such as notice-period compensation and end-of-service benefits.

 

For employees facing such a dispute, the practical route is to document the circumstances, approach MoHRE and allow the statutory dispute-resolution process to take its course. Where a settlement cannot be reached, the applicable claim value and circumstances will determine whether MoHRE can issue a final decision or whether the dispute proceeds to the competent court.