UAE labour law confusing, needs overhaul - lawyers

The UAE's labour law is in need of an overhaul and is confusing employers, according to associates with law firm Clyde & Co.

New legislation in the emirates would need to recognise redundancy as a valid reason for dismissal as well as outline procedures for termination of staff contracts and disciplinary procedures, said Sara Khoja, associate with the firm in Dubai.

The current law, which dated from 1980, had only been updated via decrees by the government but was expected to be overhauled, she said.

“Many employers seem to be confused as to when they can terminate (employees’) employment in the UAE and, in particular, when they can make redundancies,” according to Joanne Hennessy, another associate.

“Redundancy is not recognised in the UAE and so, strictly speaking, is not a valid reason for dismissal in the UAE. However, the labour courts have recognised an employer’s right to restructure their business and not doing so would be unrealistic and potentially jeopardise the continued employment of the entire workforce as opposed to part of it.”

The labour law implied staff could only be dismissed for performance or misconduct reasons, she said.

There was was widespread confusion over compensation for dismissed employees in the UAE.

“Contrary to popular belief, an employee has no automatic entitlement for compensation or three months remuneration on their dismissal,” said Hennessy.

An employee would have to complain to the Ministry of Labour or the free zone authority where their employer was based before they could make a claim for compensation.

Only a labour court could order payment of compensation by an employer to an employee and up to a maximum of three months remuneration if it established an employee had been arbitrarily dismissed, she said.

She also warned that extra care needed to be taken by employers contemplating dismissing a UAE national following a recent Ministry of Labour decree protecting national workers from dismissal where an expat performed the same role.

But it was not yet clear how the decree was going to be enforced, she added.

Domestic workers were excluded under the labour law in the UAE but the emirates may follow Saudi Arabia, which had published draft law protecting domestic workers.

Hennessey also pointed out that different labour law applied in the UAE depending on where an employer was based, with Dubai International Financial Centre (DIFC) having its own employment rules.

“The DIFC labour law does not provide a right of complaint for employees who think they’ve been unfairly dismissed and it also provides fairly limited guidance for employers as to when they can dismiss an employee," she said.

The absence of unfair dismissal rights in the DIFC was an “oversight” rather than a “deliberate omission” and it remained to be seen whether the DIFC would update its rules, she added.

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