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A Comparison of Unfair and Arbitrary Dismissal Under UAE and Dubai International Financial Center or “DIFC” Employment Law

Posted on 30th December 2009 by Camille Paldi,

 

Although many similarities exist between the United Arab Emirates or (“UAE”) Labor Law, Federal Law No. (8) of 1980[1] and the Dubai International Financial Center or (“DIFC”)  Employment Law, DIFC Law No. 4 of 2005[2], one crucial difference is that there is no enforceable concept of unfair or arbitrary dismissal under DIFC Employment Law.

Under Article 123[3] of the UAE Labor Law, a worker whom has been arbitrarily dismissed may receive up to three months salary based on the last remuneration the worker received without prejudice to the termination notice allowance and the end-of-service gratuity the worker is entitled to under the law. 

According to Article 122[4] of the UAE Labor Law, a worker may be deemed to have been arbitrarily dismissed if  “the reason for the termination is irrelevant to the work and more particularly, if the reason is that the worker has submitted a serious complaint to the competent authorities or has instituted legal proceedings against the employer that has proved to be valid.”  However, in Abu Dhabi Court of Cassation Judgment No. 133/14 dated 8 November 1992[5], the Court of Cassation held that termination of employment based on company reorganization due to falling world oil prices was justified under the UAE Labor Law.[6]  In a more positive light in terms of employee rights, Dubai Court of Cassation Judgment Number 25/98 dated 2 May 1998[7] states that if moving an employee to a less privileged position causes the employee to resign, acceptance of the resignation by the employer is deemed actionable on the basis of arbitrary dismissal.[8]  Although the concept of arbitrary termination exists under UAE Labor Law,[9] the court may apply the law on a case-by-case basis and is not bound by precedent. 

In contrast, the DIFC Courts are bound by precedent, however, the DIFC Employment Law[10] does not recognize the concept of unfair or arbitrary dismissal.  The DIFC Employment Law,[11] however, is equipped with a grievance procedure where in which employees can file complaints, investigations can be conducted, and a wide variety of remedies may be ordered by the Director of Employment.  According to Article 65[12] of the DIFC Employment Law, an employee may file a complaint with the Director of Employment to resolve employment disputes.  Although the Director of Employment can make determinations and orders under Article 68[13] of the DIFC Employment Law including a wide array of remedies including inter alia to hire a person and pay the person any wages lost because of the contravention; reinstate a person in employment and pay the person any wages lost because of the contravention; pay all wages to an employee; pay a person compensation; pay a person any amount the Director determines is owing under any provision of the Law or Regulations; taken within a specified period, any action the Director considers reasonable that eliminates or reduces the adverse effect on the complainant of any matter relating to the complaint; pay an employee, or other relevant person, reasonable and actual out-of-pocket expenses incurred because of the contravention; limit the hours of work of employees to the hours or schedule as specified by the Director, post notice, in a form and location specified by the Director respecting a determination or a requirement, or information about this law or the regulations; or employ, at the employer’s expense, a payroll service for the payment of wages to an employee, currently under the DIFC Employment Law, there is surprisingly no protection for a worker whom has been arbitrarily or unfairly dismissed.   In the case of Rasmala Investments Limited v various Defendants CFI 001-006/2009 under the Judicial Authority of the Dubai International Financial Center,[14] Justice Tan Sri Dato’ Seri Siti Norma Yaakob ruled that the DIFC Employment  Law[15] makes no provision for an employee to claim for unfair dismissal.  Justice Yaakob stated that, “At most, the Employment Law gives power to the Director of Employment Standards to administer the Law by proposing Regulations to be made to include matters not dealt with by the Law.”[16]

Under Clause 63(1)(g)[17] of the DIFC Employment Law, the Director may propose Regulations to the Board of Directors of the DIFC Authority in respect of any matter that facilitates the administration of the Law or furthers the purpose of the Law, including but not limited to: (g) the maximum compensation for discrimination or unfair dismissal.  Thus, the Director of Employment technically possesses the power under the DIFC Employment Law[18] itself to propose to the Board of the Directors of the DIFC Authority to amend the DIFC Employment Law[19] to include a provision for unfair dismissal based on the relevant provisions of the UAE Labor Law[20] in order to make the DIFC Employment Law[21] more balanced in terms of the employer/employee relationship and to make the DIFC more employee friendly in addition to investor friendly.    

Although the concept of arbitrary termination  exists under the UAE Labor Law,[22] it depends on a case by case basis on how the concept is applied.   In addition, although the concept of arbitrary termination and unfair dismissal currently does not exist under the DIFC Employment Law,[23] the DIFC Employment Law[24] itself provides an avenue for the Director of Employment to attempt to amend the law to include such a concept. 


[1] UAE Labor Law, Federal Law No. (8) of 1980.

[2] DIFC Employment Law, DIFC Law No. 4 of 2005.

[3] UAE Labor Law, Federal Law No. (8) of 1980, Article 123.

[4] UAE Labor Law, Federal Law No. (8) of 1980, Article 122.

[5] Abu Dhabi Court of Cassation Judgment No. 133/14 dated 8 November 1992.

[6] Price Richard and Essam Al Tamimi, “United Arab Emirates Court of Cassation Judgments 1989 – 1997”, p. 341.

[7] Dubai Court of Cassation Judgment Number 25/98 dated 2 May 1998.

[8] Richard Price and Essam Al Tamimi, “United Arab Emirates Court of Cassation Judgments 1998 – 2003,’ p. 395.

[9] UAE Labor Law, Federal Law No. (8) of 1980.

[10] DIFC Employment Law, DIFC Law No. 4 of 2005.

[11] Ibid.

[12] Ibid, Article 65.

[13] Ibid, Article 68.

[14] Rasmala Investments Limited v various Defendants CFI 001-006/2009 under the Judicial Authority of the Dubai International Financial Center.

[15] DIFC Employment Law, DIFC Law No. 4 of 2005.

[16] Ibid.

[17] DIFC Employment Law, DIFC Law No. 4 of 2005, Article 63(1)(g).

[18] DIFC Employment Law, DIFC Law No. 4 of 2005.

 [19] Ibid.

[20] UAE Labor Law, Federal Law No. (8) of 1980.

[21] DIFC Employment Law, DIFC Law No. 4 of 2005.

[22] UAE Labor Law, Federal Law No. (8) of 1980.

[23] DIFC Employment Law, DIFC Law No. 4 of 2005.

[24] Ibid.


Posted on 30th December 2009 by Camille Paldi


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