Introduction to Arbitrary Dismissal UAE
The landscape of employment contracts UAE is defined by rights, responsibilities, and compliance governed by stringent laws. As Dubai and the wider UAE continue to attract global talent and businesses, ensuring fair termination practices is essential for maintaining trust and integrity in the workplace. Yet, many employees and employers find themselves navigating the complex issue of arbitrary dismissal UAE—where a terminated employee questions whether the termination was legally justified. The UAE employment law offers significant safeguards for both parties, but misconceptions and lack of awareness can lead to costly disputes. Understanding the difference between lawful and arbitrary termination is critical for employers aiming at labour law compliance UAE and for employees seeking to protect their rights and secure deserved compensation.
Defining Arbitrary and Unjust Termination in the UAE
Arbitrary dismissal in UAE is rooted in the principle of fairness in termination practices. According to the UAE Labour Law, specifically Article 47 of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, an unjust termination is when an employer dismisses an employee for filing a legitimate complaint with the Ministry of Human Resources and Emiratisation (MOHRE) or pursuing a lawsuit against the employer that is proven valid.
It is distinct from summary dismissal, which is lawful and ordinarily covered under Article 44, where immediate termination occurs due to significant misconduct, such as fraud or persistent absence. Employers must ensure that all contract terminations are based on concrete, legally supported reasons to avoid wrongful termination claims.
Legal Framework: Articles 44 and 47 of UAE Labour Law
To determine whether a dismissal is arbitrary dismissal or lawful summary dismissal, the central references are Article 47 and Article 44 of Federal Decree Law No. 33 of 2021 (effective since February 2022), substantiated by guidance from the UAE Ministry of Human Resources and Emiratisation.
– Article 44: Specifies conditions for lawful summary dismissal, such as submitting false documents, gross misconduct, or unauthorized absence. The law stipulates that the employer may terminate without notice only after conducting a written investigation of the worker, and the dismissal notice must be in writing, justified, and handed over duly to the employee.
– Article 47: Outlines arbitrary dismissal, stating that if the termination occurs because an employee filed a complaint to MOHRE or filed a lawsuit against the employer, whose validity is proven, such termination is illegal.
Employment Contracts: Fixed-Term Contracts Under the New Law
Under the current UAE Labour Law (Federal Decree-Law No. 33 of 2021), all employment contracts must be fixed-term with a maximum duration of three years, as the concept of unlimited contracts has been abolished. Fixed-term contracts carry distinct termination protocols:
- Fixed contract termination UAE: These contracts may be terminated before expiry if both parties agree, or for legally specified reasons under Article 42. Either party can terminate the contract for any ‘legitimate reason’, provided that a written notice of between 30 to 90 days is given. Unilateral termination without proper cause typically obligates the offending party to pay compensation.
Importantly, despite being fixed-term, contracts can be terminated during their term for a “legitimate reason” with proper notice. This includes redundancy, which is now expressly recognized as a valid reason for termination if the employer is bankrupt or insolvent, or if there are economic or exceptional reasons preventing the continuation of the project.
Non-compliance with termination procedures stipulated in the contract or the UAE Labour Law opens contracts to legal scrutiny and subsequent UAE labour court claims.
Redress and Compensation for Arbitrary Dismissal: Narrower Scope
When employees face arbitrary dismissal in UAE, the legal recourse is robust. According to the UAE Ministry of Human Resources and Emiratisation, an employee who proves unjust or arbitrary termination is entitled to claim compensation. The court will assess the value of compensation considering the type of work, the extent of damage caused to the employee, and the duration of employment. In all cases, the compensation amount must not exceed the wage of the employee for a period of three months, calculated based on the last wage the employee was entitled to.
However, on the other hand, under the revised Federal Decree‑Law No. 33 of 2021, compensation for wrongful dismissal is now limited strictly to cases of illegal termination—i.e., when an employee is dismissed in retaliation for filing a serious complaint with MOHRE or a valid legal claim, as defined by Article 47(1). Unlike the broader “arbitrary dismissal” concept under the old law, one cannot claim compensation simply for being dismissed without just cause.
Courts retain discretion to determine damages based on job type, length of service, and actual harm, but compensation remains capped at three months’ wage and is not applicable in other termination scenarios . The employee still retains accrued entitlements—such as notice period pay and end-of-service gratuity—which must be paid irrespective of dismissal legality. This restriction reflects a more employer-friendly framework, while still safeguarding employees against retaliatory dismissals.
In fact:
- The employee remains eligible for any outstanding wages, accrued leave, and end-of-service benefits in UAE as per length of service. Under the current law, end-of-service gratuity is payable regardless of the reason for termination.
- Labour court proceedings are typically expedited, especially when urgent claims regarding salary, benefits, or arbitrary dismissal are involved.
Pursuing UAE labour court claims requires submission of relevant documentation, such as the employment contract, records of performance or warnings, and any correspondences regarding termination. All payments of contractual and statutory entitlements must be made within 14 days of the end of employment, failing which an employer may face significant fines.
Practical Steps for Avoiding Unfair Dismissal UAE Disputes
Proactive measures reduce the likelihood of wrongful termination Dubai disputes:
- Maintain thorough performance documentation: Employers should consistently evaluate and record employee performance, highlighting both achievements and areas of concern.
- Follow procedural fairness: Properly notify employees of alleged misconduct or unsatisfactory performance before initiating termination. For summary dismissal, a written investigation must be conducted.
- Comply with statutory notice periods and compensation mandates: Adherence to legal obligations minimizes the risk of successful claims for arbitrary dismissal UAE.
- Engage in transparent communications: Proactively communicate business restructurings or redundancy reasons, supporting operational needs with credible documentation.
- Seek timely legal counsel: Consulting with seasoned legal consultants ensures current compliance with all UAE employment law updates and protection of employer rights.
Both parties—employer and employee—should recognize their rights and obligations under UAE Labour Law to foster a fair, safe, and legally compliant work environment.
Conclusion and Legal Support for Labour Law Compliance UAE
Understanding arbitrary dismissal UAE is fundamental to ensuring fairness and minimizing disputes within Dubai’s dynamic labor market. Employers are advised to document every employment-related decision and follow the procedures outlined in Federal Decree Law No. 33 of 2021, referencing Articles 44 and 47, along with guidance from the UAE Ministry of Human Resources and Emiratisation. Employees are empowered to seek justice against unjust termination, including claims for unfair termination compensation and end of service benefits.
Whether you are an employer, HR professional, or expatriate worker, navigating UAE employment law demands keeping abreast of the latest legislative updates and procedural best practices. For risk mitigation, business continuity, and strong defence against legal claims, engaging expert legal consultants in Dubai is the most prudent approach to ensuring every employment contract, termination, and dispute resolution fully aligns with current labour law compliance UAE.
For any queries or services regarding legal matters in the UAE, you can contact us at (+971) 4 3298711, or send us an email at proconsult@uaeahead.com, or reach out to us via our Contact Form Page and our dedicated legal team will be happy to assist you. Also visit our website https://uaeahead.com
Article by ProConsult Advocates & Legal Consultants, the Leading Dubai Law Firm providing full legal services & legal representation in UAE courts.
