Claiming compensation for termination due to an economic reason

Dear Questioner,

I understand that your contract is unlimited and you have been terminated by the employer with a 30 days statutory notice.

Under the UAE Labour Law, there are two main ways for an employer to legitimately terminate an unlimited term contract:

1. For a ‘valid’ (i.e. performance related) reason on notice (the UAE Labour Law provides for a minimum notice period of 30 calendar days. However, the parties are entitled to agree on longer notice periods in the contract); or

2. Summarily (without notice and end of service gratuity) for one of the 11 exhaustive gross misconduct reasons set out in Articles 88 and 120 of the UAE Labour Law.

In your case, the reason has been mentioned as redundancy which is not a valid reason for termination as per UAE law. This is an incident of arbitrary dismissal.

Arbitrary or unfair dismissal takes place when an employer terminates an employee or forces him to resign without any justifiable reasons [not wok or performance related problems].

As per Article 123 of the UAE Labour Law, if arbitrary dismissal is proven, the court will order the employer to pay compensation to the employee.

The court will assess the value of compensation taking into account the type of work, the extent of damage incurred to the employee and the duration of the employment.

In all cases, the amount of compensation must not exceed the wage of the employee for a period of three months, calculated on the basis of the last wage the worker is entitled to.

Hope the above explanation is satisfactory. Thanks for writing to me. Please feel free to contact me if you need any further information, assistance or guidance on this matter.

Regards,

Rajasree Ravivarma

0585013663