Unlawful Termination of Employment in UAE

Unlawful Termination of Employment in the UAE

The concept commonly referred to as “arbitrary dismissal” is one of the most frequent issues in employment disputes, due to its direct impact on an employee’s professional and social stability, as well as the legal and financial consequences it imposes on both parties of the employment relationship.

However, from a legal standpoint in the United Arab Emirates, it is essential to use the precise terminology adopted by the legislator. The correct legal term is:

“Unlawful Termination of Employment”

This is explicitly provided under Article 47 of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations.

It is also important to note that the 2024 amendment (Federal Decree-Law No. 9 of 2024) did not replace Article 47, but instead amended Articles 54 and 60, meaning that the legal framework governing unlawful termination remains unchanged in substance.

Arbitrary Dismissal vs. Unlawful Termination (Legal Perspective)

While the term arbitrary dismissal is widely used in general discussions, the UAE Labour Law adopts a more precise legal concept:

Unlawful Termination of Employment

This distinction is crucial in:

• Legal drafting and court submissions
• Academic legal writing
• Accurate legal classification

Because proper legal analysis begins with the correct terminology.

When is Termination Considered Unlawful?

Under UAE Labour Law, termination is considered unlawful when:

 The employer terminates the employee because of:

• Filing a serious complaint with the Ministry of Human Resources and Emiratisation (MOHRE), or
• Initiating a lawsuit against the employer that is proven valid

The key factor is not merely the termination itself, but the illegitimate motive behind it, namely retaliation against the employee for exercising their legal rights.

Legislative Philosophy of UAE Labour Law

UAE Labour Law adopts a balanced approach:

 It allows termination of employment contracts for legitimate reasons
 It prohibits abuse of this right

Conditions for Lawful Termination:

• Existence of a valid reason
• Compliance with notice period (minimum 30 days, maximum 90 days)

Types of Employment Termination in UAE Law

1. Lawful Termination (Article 43)

• Based on a legitimate reason
• Requires proper notice

2. Termination Without Notice (Article 44)

Permitted only in serious misconduct cases such as:

• Forgery
• Disclosure of trade secrets
• Unjustified absence

3. Unlawful Termination (Article 47)

• Based on employee complaint or legal action
• Considered an abuse of employer rights

Compensation for Unlawful Termination

If the competent court determines that termination was unlawful, the employer must pay:

 Fair Compensation

• Up to a maximum of three months’ salary
• Calculated based on the employee’s last wage

 Assessment Factors:

• Nature of the work
• Length of service
• Extent of damage suffered

Employee Rights Beyond Compensation

The compensation does not replace other entitlements. The employee is still entitled to:

 Notice period compensation
 End-of-service gratuity
 Any other outstanding dues

This reflects a clear legal distinction between:

• Compensation for unlawful termination
• Rights arising from the end of employment

Burden of Proof in Unlawful Termination Cases

The employee must do more than prove termination. They must establish a causal link between:

• The termination, and
• Their complaint or legal claim

Key Evidence Includes:

• Emails and written communications
• Official complaints
• Internal correspondence

This highlights that such disputes are both factual and legal in nature.

Legal Procedure for Filing a Claim

Employment disputes in the UAE follow a structured process:

1. Filing a complaint with MOHRE
2. Attempting amicable settlement
3. Referral to court if settlement fails

 Under the 2024 amendment:

• MOHRE may issue decisions in disputes up to AED 50,000
• Parties retain the right to appeal before the competent court

Legal Conclusion

What is commonly referred to as arbitrary dismissal in the UAE is legally defined as:

 Unlawful Termination of Employment

This occurs when:

• The termination is due to an employee filing a complaint or lawsuit

And results in:

• Compensation of up to three months’ salary
• Without prejudice to other employment rights

Final Insight

The UAE legislator has shifted from broad terminology to a more precise and controlled legal concept, limiting unlawful termination to clearly defined circumstances.

This approach:

• Enhances legal certainty
• Reduces ambiguity
• Places a structured burden of proof on the employee