The UAE labour laws are very much lenient to the workers. When an employer dismisses an employee without a notice or warning letter or forces him to resign from the job without any reasonable grounds, such dismissal would amount to an arbitrary dismissal. Article 122 of the UAE Labour Law defines that when a worker is dismissed by his employer for a reason irrelevant to the work, it is ‘arbitrary termination’.
According to Article 123 of the UAE Labour Law, if arbitrary dismissal is proven, the Court can order the employer to pay an additional compensation to the employee.
As per the UAE Labour Law, there can be two types of employment contracts between the employer and the employees. They are (i) Limited Term Contracts and (ii) Unlimited Term Contracts.
In case of a limited contract, there is no notice provision under the UAE Labour law for the termination of limited term contract. Such contracts simply expire at the end of the term or on the date specified in the contract (unless terminated earlier by either party).
In case of an unlimited contract, it can be terminated by either the employer or employee at any time subject to serving a notice to the other party for a period of at least 30 days, unless the Employment Contract provides for a longer notice period.
It is an obligation of the employer under Article 46 of the UAE Labour Law to give a trainee enough time to acquire theoretical knowledge. He should also give the trainee a sufficient time to learn the principles of the occupation and the skills for which he is recruited.
Further, the Labour Law allows summary dismissal of an employee by the employer on eleven exhaustive grounds under Articles 88 and 120 of the UAE Labour Law.
The grounds on which an employee can be dismissed without a notice are:
- Use of false identity or nationality and submission of forged certificates or documents.
- If an employee is engaged on probation and is dismissed during or at the end of the probationary period.
- On committing a fault due to which a substantial loss was caused to the employer. In such cases, the employer should have notified such an incident to the labour department within 48 hours of becoming aware of its occurrence.
- On disobeying instructions on the safety of work or workplace. This is subject to a condition that such instructions are in writing and posted at a conspicuous place and are communicated verbally to an illiterate worker.
- On breach of his basis duties under the employment contract and fails to redress such default despite a written interrogation and a warning that he will be dismissed if such default is repeated.
- On revealing any confidential information of the firm for which he works.
- On conviction by a competent court of a crime against honour, honesty or public morals.
- If he was found in a drunken state or under the influence of a narcotic drug during working hours.
- If he assaults the employer, the manager in charge or any of his workmates during working hours.
- If he is absent from work without a valid reason for more than 20 non-successive days in one single year, or for more than seven successive days.
Alternately an employee may validly resign prior to the expiry of the contract under the provisions of Article 121 of the law as per which, he can abandon his work without notice in the contract or in this Law (a) if the employer fails to honour his obligations towards the worker or (b) if he is assaulted by the employer or the employer’s legal representatives.
The concept of Arbitrary dismissal under the UAE law is very much similar to the concept of unfair dismissal under the UK Law where natural justice principle is strictly followed. After an employee is terminated from the employment, he may pursue claim for arbitrary dismissal by the employer. Therefore, it is compulsory for the employer to strictly follow the statutory norms in case of termination of an employee.
The established jurisprudence and practice in the UAE is that the Courts will not deem a termination as ‘arbitrary’, if it is found that either (i) the employee is guilty of one of the specified (and exhaustive) gross misconduct type reasons listed in Articles 88 and 120 of the UAE Labour Law, or (ii) the employee is a poor performer (and there is documentary evidence supporting the poor performance or misconduct).
Compensation for Arbitrary Dismissal
According to the UAE Labour Law, the maximum additional compensation that can be awarded for an ‘arbitrary dismissal’ of an employee is three months’ remuneration, calculated based on the last pay received by the employee prior to dismissal.
For determining the amount of compensation, the Court will consider the type of work, the extent of damage incurred to the employee and the total period of the employment. The amount, however, should not exceed three months wages.
In addition to the aforementioned compensation, the employee can claim his gratuity, notice period dues, payment in lieu of untaken leave or any other unpaid dues and post-termination entitlements he is entitled to from his employer under UAE Labour Law.
For the purpose of computation, the term ‘remuneration’ refers to an employees’ full pay (basic salary plus any monthly allowances). In addition, where the employee receives regular or guaranteed bonus or commission payments, these may also be considered by the Court while determining the employee’s remuneration. The actual amount of the award, if any, is ultimately determined by the Court.