Redundancy Law in UAE

It refers to the dismissal or termination of an employee by their service, to beat the reduction within the progressive business activities.

Redundancy in Federal Law No. 8/1980 of UAE Labour Law. Ministerial Resolution 279 of 2020 was initiated, in an effort to strengthen private sector employers within the wake of the COVID-19 response.

An employer is legally required to abide by the legal provisions found out to supply employees with certain rights under such circumstances of redundancy dismissals. These include the right to adequate notice (which is typically 30 days), notice payment (if the worker has accomplished his probation), and therefore the right for the end of service gratuity (presuming one year of service has been accomplished)

Lately, Redundancy has been the title on Termination Letters, which has resulted in many people losing their jobs in the UAE. In such cases, many of us have tons of doubts about Redundancy and Redundancy rights. Under the UAE Labor Law, a workman, who is employed during a Limited Contract or Unlimited Contract could be legally terminated for the succeeding reasons:

If the employee is terminated for a legitimate reason (it must be related to the employee’s employment), by issuing a notice in compliance with the terms of the labour contract in which it is provided; or
In line with the provisions UAE Labor Law, Article 120, which furnishes a list of occasions, where an individual may be summarily terminated (for cause).
If an employee is terminated for a rightful reason (it must be associated with the employee’s employment), by issuing notice in compliance with the terms of the labour contract in which it is provided; or
In line with the provisions of Article 120 of the UAE Labor Law which offers an inventory of instances where a person could also be summarily dismissed (for cause).

If the employee imitates a false identity or nationality or put forward fake certificates or documents
If the employee is employed on probation and is discharged during the probationary or on its expiry
If the employee does something wrong, resulting in considerable material loss for the employer, in the event that the latter informs the Ministry of Labour of the incident within 48 hours of its occurrence
If the employee pays no attention to the instructions and guidelines respecting industrial safety or workplace safety, as long as those instructions are in writing and have been pasted up at a noticeable place and, in the case of an illiterate employee, that he must has been acquainted with them orally
If the employee does not carry out his basic functions under the employment contract and keeps on violating them, even though he has been the subject matter of a written investigation that he has been warned of, will be dismissed if such behavior continues
If the employee discloses any secret or confidential matter of the establishment in which he is employed
If the employee is finally punished by any competent court for an offence including honesty, honour or public morals;
If the employee is involved in a state of alcoholism or under the effect of a drug during the working hours;
If, during working hours, the employee assaults the employer, the responsible manager or any of his co-workers
If the employee absents from his job without a legitimate reason beyond twenty non-consecutive days, or beyond seven consecutive days, in any one year.

Moreover, the UAE Labor Law observes that cessation of a labour contract is arbitrary unless it’s not for a legitimate reason (for example, misconduct or performance) or for any reason summarized under Article 120. Arbitrary or unlawful termination arises when an employer terminates a workman or compels him to resign without any acceptable reasons. In accordance with the Article 122 of the UAE Labor Law, arbitrary dismissal of an employee takes place, when an employee is dismissed for reasons not associated with the work performance, or when an employee files an authentic complaint against an employer, which made the latter discharge him malevolently. As per the Article 123 of the UAE Labor Law, if arbitrary termination is substantiated, the court will command the employer to compensate the employee. The court will assess the worth of compensation, by taking into consideration of the type of work the employee does, the extent of harm incurred to the workman and the period of the employment. In all the cases, the measure of compensation must not surpass the wage of the worker for a period of 3 months, calculated on the basis of the last wage the worker is eligible for.

According to Article 115, Under the UAE Labor Law, if an employer arbitrarily terminates the employee for any reason aside from the explanations set forth in Article 120, the Labor Agreement may pay a period of up-to-date pay or 3 months’ payment. Whatsoever the amount is lesser comparatively, the employer will have to pay that amount to the employee. In short, if a worker has been working incessantly for at least 2 years for an employer and has been discharged due to Redundancy, then he is obviously entitled for 3 months’ salary as compensation.

One of the paramount questions for an employer who needs to reduce costs in business is how much does it cost to form an employee redundant. When an employee is dismissed, the employer becomes bounded to pay or compensate the employee in compliance with the special conditions set forth in the labour contract with him.

The UAE Labor Law sets forth an employee’s entitlement upon the dismissal of his/her employment:

the provision of notice or recompense in the place of notice. The UAE Labor Law stipulates for a minimum of 30 days’ notice which can’t be waived even with the consent of the worker.
all accrued/accumulated benefits (such as accrued and accumulated leave) must be paid to the worker.
provided the worker has not taken part in a company-maintained pension scheme, end of service benefits (or gratuity) ought to be paid.
the employer is also indebted to repatriate the worker to his place of origin if the worker does not find alternate employment in the UAE within a specified period of time.

Whilst the payments set forth above are legitimate entitlements, a general query from the employers is – if there is any commitment to recompense for redundancy, as is the case in many jurisdictions around the globe. Since the UAE Labor Law doesn’t furnish for the theory of redundancy, as a consequence, there is no provision for redundancy indemnification. Additionally, the UAE Labor Law stipulates that where an employer wishes to terminate an employee for any reason aside from a rightful one, or one among the grounds set forth under Article 120, the employer will be responsible to compensate the employee. The maximal compensation is 3 months’ salary to be paid along with any other contractual or legitimate liabilities.

Therefore, on the surface, a redundancy could conceivable create an obligation on the employer recompense the employee. Nevertheless, the UAE labour courts have acknowledged an employer’s right to reorganize its business and have argued that redundancy is a reasonable non-arbitrary reason to fire an employee. As the UAE courts don’t follow a legal procedure of precedents, it is discreet to set up a circumscribed consultation process and ensure that any resolution to make any particular employee, or group of them, redundant is capable of vindication and is rational, transparent and equitable to mitigate the risk of upholding a claim by an employee for arbitrary/unfair dismissal.

Your employer must treat you fairly and act in line with your contract and legal entitlements, if you’re affronted with redundancy. This includes ensuring that a worker is given an appropriate notice period and you’re consulted with the concerned company officials as regards to redundancy. If these appropriate steps weren’t taken from the employer side, then the worker possesses a claim for unlawful termination or claim compensation.

The news recently was sadly filled with stories about the companies taking into account that redundancies as a result of the consequence of coronavirus. The harsh reality is that businesses across all sectors are struggling with the impact of coronavirus, and in spite of the efforts by the govt. to offer support, the effect of this on jobs seems to be unavoidable. When redundancies take place, the employer has certain more obligations towards workers, including the responsibility to discuss with them and to pay redundancy compensation to those who are entitled to.

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Redundancy Law in UAE

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