Redundancy Dismissals Laws in UAE

When the economy is evolving and reaching its peak then redundancy or terminations also become inevitable. Redundancy dismissals, sometimes are required for a business to remain successful in the market or to survive easily. UAE’s labour market is always guided by properly defined laws. It ensures the transparency in handling the redundancy dismissals. The understanding of these laws is very important for everyone. UAE Labour Law also defines each and every thing very clearly. We must suggest that this is very crucial to understand the laws, for both parties e.g. employer and employee. Let’s go back to Redundancy Dismissals Laws in UAE, but we need to study first the legal framework.

The legal framework governing redundancy dismissals in UAE is outlined in Federal Decree-Law No. 33 of 2021 on Labour and Employment Relations. Please be informed this is also referred as UAE Labour Law or Labour Law UAE). The legislation of UAE Labour Law applies to the private sector. It applies to employers and employees of the private sectors. UAE Labour Law is a perfect combination of labour rules defining labour rules, labour hiring, labour rights, and terminations including redundancy. It provides a very comprehensive guidance. Especially the UAE Labour Law 2022, which modified almost all the existing Labour law and legislation. This law applies to all the employees working under MOHRE but excludes domestic workers, and government employees. Redundancy Dismissals Laws in UAE are well defined.

Redundancy occurs when the position of an employee is removed due to business restructuring. The position is removed due to economic downturns, or any technological advancements can also be the reason of position removal. UAE Labour Law explains the legitimate reasons for redundancy as follows:

• Financial Challenges or Constraints.
• Technological Advancements.
• Organizational Restructuring
• Business Relocation
• Business Closing

It is an obligation of “Employers” that they have to demonstrate the redundancy but on a genuine basis. Any illegitimate redundancy will allow employees to ask for the compensation of unfair dismissal.

Employers in United Arab Emirates must adhere to obligations when they have to implement redundancy. It has to be ensured that compliance rules must be met. What are the requirements, have a look:

1. Notification: Employers have to provide first, notice of termination, which should be based on employee’s contract. The notice period is normally 30 days to 90 days.
2. Compensation Entitlements: Employees are entitled to have all the unpaid salaries, unpaid end of service benefits. This is the right of employees along with all other labour law benefits. Gratuity, severance pay, unpaid commissions etc all has to be paid, before the termination or redundancy.
3. Documentation and Legal Process: Employers must document the reasons for redundancy and ensure that the process aligns with legal requirements. Any ambiguity or failure to follow due process could lead to disputes or claims of unfair dismissal.

Employees working in UAE, facing the redundancy, also have rights as per labour law. Any termination or redundancy does not mean you can deprive the employees. Let’s discuss the employee rights in details:

1. Notice Period: Employees must receive notice period, as per their contracts. If either party wants to step back from notice period then has to compensate the other party.
2. End-of-Service Gratuity: End of service benefits is the right of employee and he has to be paid. The exact calculation can be checked through good lawyers in UAE.
3. Right to Challenge: Employees also have rights of opening the complaints with MOHRE against employers. This right is granted by government to all the employees working in United Arab Emirates.
4. Job Search Freedom: Employees must have chance to get leave or freedom to find new jobs during the notice period.

There are some special considerations as well. Redundancy laws have few implications for non-nationals as follows:

• Visa Implications: When an expatriate worker’s employment is terminated, then Visa can also be affected. The employer has to cancel his visa. Labour law also provides grace period after the cancelation of VISA.
• Repatriation Costs: Employers are obligated to cover repatriation costs, but if that is promised in the contract.
• Any other benefit: If any other benefit is promised in the contract, then employer also has to provide that.

Certain industries in UAE, e.g. free zones, healthcare, etc, operate under sector-specific rules. Sector-specific rules are little or more, different than standard MOHRE rules. Employers and employees have to follow those rules. Lawyers can be consulted in case if there is any difficulty.

Recent updates mean UAE Labour Law modifications 2022. The updates were introduced to enhance the labour market flexibility with a larger aim to protect employee rights in UAE, as follows:

• New Limited or Fixed-Term Contracts: All employment contracts are now required to be fixed-term or limited, with a maximum duration of three years, renewable upon mutual agreement. Duration of the agreement can be mutually decided between employer and employee.
• Anti-Discrimination Checks: Employers are strictly prohibited from discrimination.

We would like to provide useful and practical tips to employers and employees.

For Employers:

• Employers have to make sure the transparency and fairness while implementing redundancy. Though UAE courts accept the legitimate reasons of redundancy but a wrong decision can also be challenged in court.
• Employer has to provide complete and clear documentation, in order to justify his decision of redundancy.
• Employer has to fulfill all legal requirements, e.g. gratuity, unpaid salary, unpaid benefits ert

For Employees:

• Don’t take wrong legal action if the redundant decision is not wrong.
• Must check with lawyers and legal consultants, about the legitimacy of redundancy or chances of success, if he wants to open the court case.
• Understand your labour contract first, with the assistance of lawyers.
• Use the MOHRE grievance to register disputes.

Redundancy dismissals in UAE are allowed by law and courts, if the decision is taken on lawful and legitimate grounds. If the decision is not taken on legitimate grounds then, employees are also given the chance to open a court case. Therefore the best idea is to consult experienced Emirati lawyers in Dubai. Lawyers in Dubai are well known in UAE for labour law disputes, real estate disputes and business disputes. The assurance taken from lawyers will help the both parties to avoid any conflict. We suggest, while applying the legitimate redundancy, employer should seek the legal advice. Employee must take the legal advice too, if he has to open a case against the employer for false redundancy termination, even though redundancy has been illegitimate. Our Lawyers in Dubai are always ready and available to provide justice to individuals and companies.