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Enforcing compensation rights in trying times.

Summary: Ahmed Odeh, Legal Consultant at MIO Law Firm provides his views on unfair dismissal

The continual decline in global oil prices has undeniably affected many economies across the globe. Oil dependent countries must turn to other sectors of their market, while oil and gas companies all over the world have increasingly started letting go of their employees in bulk. In the GCC region public bodies in Kuwait are looking at laying off expat workers, while in the UAE, Emirates Islamic recently announced its move to retrench its staff to cut costs.

In some instances these actions can amount to unfair dismissal. This can be harsh on both employers and employees. Disputes related to unfair dismissal can relate to salary, end- of-service benefits, compensation for airline tickets and so on. We outline below a guide to how employees can enforce their labour rights in the UAE.


The best form of dispute resolution by far is direct negotiation. It's cost effective and quick. But we understand that not all employers are eager to sit at a negotiating table so they may avoid using this method. For employees, it is always advisable to get in contact with the employer to negotiate a settlement. During the negotiations, do not threaten to sue the employer as this will only make matters worse and likely reduce the effectiveness of the negotiation. Moreover, do not state that you have taken advice from a lawyer even though you may have done so as that will not help you make your case. Also, make sure you understand your rights beforehand and be precise about what it is you want.

It must be noted that an employee must not under any circumstances sign anything prior to receiving a cheque for final settlement as agreed upon. If the employee does so, the employer may cancel the employee's visa and the employee will not be able to make a claim for any further financial dues in the future.


If negotiations fail, then an employee may submit a request to the relevant labour department depending on the Emirate he or she is employed in. The labour department will then summon the employer to a meeting with the employee to take whatever action necessary to amicably settle the dispute. This process takes about two weeks to complete.


If an amicable settlement is not reached between the two parties, the employee will need to obtain a no objection certificate (NOC) from the labour department to refer the dispute from the reconciliation and settlement committee to the labour court.

An application to the labour courts shall be accompanied with a memorandum detailing a summary of the dispute, the arguments of the two parties and the observations/ findings of the labour department.

Moreover, a hearing will be set in which both parties will be summoned to present their respective arguments.

This is a critical stage in the dispute claim. As matters turn legal, the employee may wish to retain the services of a labour disputes attorney to help draft a memorandum outlining the employee's claim and the relief sought. Avoid using typing centres to draft the claim as they may not be able to protect your legal rights in the best or most effective way. Additionally, ensure all essential documents are in Arabic or legally translated into Arabic.


When the RSC transfers the case to the labour court, the court will set a date for a hearing for the claim and notify the two parties of the hearing. The court may summon a representative of the Labour Department to explain the contents of the notes submitted by it. The employer shall also be given the opportunity to provide his defence. The labour case may be appointed several hearings and it may take months until the courts deliver a final judgement on the case.


If the employee obtains a successful judgement from the labour courts for his or her rights, he or she can execute the judgement and obtain the amounts that have been awarded to him or her.

The process of enforcing a labour dispute claim may take as little as one week or as long as several years. Hence, it is always best to resolve any labour disputes amicably between the parties. In every case, the employee must be certain to bring a claim for any entitlement due within one year from the date on which the settlement payment is due. The employee may lose his or her right to claim the entitlement if the period of one year has elapsed.

It is always best to resolve any labour disputes amicably between the parties.

- Ahmed Odeh, Legal Consultant at MIO Law Firm

Definition of unfair dismissal

The UAE labour law, which governs the relationship between an employer and an employee, does not differentiate between arbitrary dismissal and unfair dismissal. The law states that "A worker may be deemed to have been arbitrarily dismissed if the cause for such termination has nothing to do with the work performed. Termination is considered arbitrary if the employee's service has been terminated on these grounds: a reasonable complaint has been lodged by the employee to the competent and appropriate authorities, or a justifiable action has been brought by the employee against the employer."

An employee will be considered to be unfairly dismissed by a company if he/ she has been terminated without having breached his/her obligations towards a company. The UAE courts have held that termination due to redundancy is not a valid reason for termination and therefore is considered as unfair dismissal.

Types of compensation for unfair dismissal:

a[pounds sterling]Notice period in lieu of termination--the employer must pay the employee compensation equal to the employee's remuneration associated with the entire period of notice or with the time by which it was reduced.

a[pounds sterling]Unutilised leave wage--if the employee has not taken his or her annual leave during the time of employment, then he or she is entitled to the leave (vacation) salary in lieu of the annual leave time as long as the accrued leave salary is not in excess of two years' worth.

a[pounds sterling]Unpaid wage--any unpaid wages is due upon termination. a[pounds sterling]End of service gratuity

a[pounds sterling]Return airfare

a[pounds sterling]Performance bonuses

a[pounds sterling]Unfair dismissal compensation (limited contracts)--when the employment contract is of limited duration, the employee is entitled to compensation equivalent to the period extending to the end of the contract period or three months' wage, whichever is less. However, if the contract states that the employee is entitled to more than three months of paid salary upon termination, then he or she shall be paid that amount.

a[pounds sterling] Unfair dismissal compensation (unlimited contracts)--when the employment contract is for an unlimited period, compensation for unfair dismissal is granted up to a maximum of three months of total wages. If the employee has served less than a year, then no compensation shall be applied.

a[pounds sterling]Others--the employer cannot charge any visa fees, agency fees, etc. as such costs that, by law, only the employer should bear.

Source: MIO Law Firm

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Publication:Banker Middle East
Geographic Code:7UNIT
Date:Apr 27, 2016
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