Wednesday, September 22, 2021

UAE: Is it legal to fire employees as a cost-cutting measure? – information

Q: I was recently fired from my job in Dubai Mainland. I am good at my job and even got a certificate of good performance from my company. The company fired me, claiming it was a cost-cutting measure. Can I file a lawsuit against my company and demand its arbitrary dismissal? Can you explain the main points of the law regarding arbitrary dismissal?

Reply: According to your inquiry, since you are employed by a mainland company located in Dubai, the provisions of the Federal Law No. 8 of 1980, the UAE Employment Relations Management Law (“Employment Law”), apply.

In the UAE, employers can fire employees for a variety of legitimate reasons, including but not limited to disciplinary action, poor performance, long-term health issues, and real economic challenges. However, if the employee believes that his termination is arbitrary and is not based on one of the above reasons, he can contact the Ministry of Human Resources and the Emirates (“MOHRE”), and then, if the following circumstances occur, the court that has the authority to hear the matter is necessary .

This is in line with Article 122 of the Employment Law, which states: “Employers who terminate an employee’s service are deemed arbitrary termination if the reason for termination is not related to work. In particular, if it terminates, the termination is deemed arbitrary termination. Employee’s services It has been terminated because he filed a reasonable complaint with the competent authorities or because he filed a due process against the employer.”

If your employer can prove that they were forced to cut costs due to financial challenges, your dismissal may not be considered arbitrary dismissal. However, if your employer cannot justify the economic challenge of cutting costs, termination may be considered arbitrary. The Employment Law does not include cost cuts as a reason for dismissal.

In addition, if you believe that your termination is arbitrary, you can also claim compensation for up to three months of wages. This is in accordance with Article 123 of the Labor Law: “1. If a worker is arbitrarily dismissed, the competent court has the right to order the employer to pay compensation to the worker.

“The court shall determine the amount of compensation based on the employee’s work nature, duration of service, and dismissal. However, in all cases, the amount of compensation shall not exceed the employee’s wages. The three-month period shall be based on the last wage paid by him. Basic calculations.

“B. The provisions of the preceding paragraph do not affect the employee’s right to receive the remuneration due and the notice period stipulated by this law.”

Ashish Mehta is the founder and managing partner of Ashish Mehta & Associates. He is qualified to practice in Dubai, the UK and India. For complete details of his company, please visit: Readers can email questions to: or to Legal View, Khaleej Times, PO Box 11243, Dubai.

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