Understanding UAE Labour Laws with Respect to Your Final Settlement

Before moving to live and work in Dubai, it is highly advisable to become familiar with United Arab Emirates' laws that apply to employment, most specifically termination of contract. Many companies operating in Dubai take advantage of their employee's ignorance of UAE labor laws. It is also important to know where your employer's business is registered---there is a different in procedures and governing body if you are working in a free zone.

Keep in mind that the UAE labor law is in favor of the employee. Regardless of what clauses are stated in your employment contract with your Employer, your contract with the Ministry of Labor and the UAE labor laws take precedence¹ if they are to your advantage. However, there are a few things you should keep in mind to maximize your rights.

1. Be careful what you sign - No matter how much pressure you receive from your Employer, DON'T sign anything they put in front of you----this specifically applies to the termination of your contract; this is because once you sign it your Employer can use it as concrete evidence of your termination date---which can limit your right to argue unfair dismissal.

2. Get all agreements from Employer in writing - Verbal agreements don't hold up in court, so always try to get all agreements made between you and your Employer in writing; even if it is just a form of a follow up email to your Employer, summarizing the verbal discussion that occurred between the both of you with the agreed outcome. Make sure to save a copy of this document in electronic and hardcopy form.

3. Don't trust your Employer - Most companies are out to make money at any cost--they don't have your best interest in mind, only their own. Though the UAE labor laws are written in favor of the Employee, always be mindful of the fact that you and you alone are responsible for looking out for yourself.

Limited or Unlimited

Realize that if you are legally working in the UAE (your Company has provided you with a resident visa), you actually have two contracts---one directly between you and your Company and one between you and the Ministry of Labor. Your contract with the Ministry of Labor is either limited(a definite term of service is specified) or unlimited(there is no specified years of service in your Contract); depending on which type of contract you have, you are entitled to certain rights and compensation.

For example, there are different laws and rights which apply to the Employee depending on the contract and number of years with the Company. Either way, the Employee is entitled to minimally, the following compensation according to UAE labor law:

Whether or not you're Employer has unjustly terminated your position from the Company or whether you have decided on your own accord that you no longer wish to work for the Company and want to terminate the Contract on your own accord, as long as either you or your Employer provide a 30 day advance notice, you are entitled to the following:

a. You have worked for the Company over one year: 30 days paid salary, regardless of whether the Company requests you to work during this period or not^4,5; compensation for the value of a plane ticket back to your Home Country; severance pay^7,8; and compensation for accrued holidays².

b. You have worked for the Company less than one year: 30 days paid salary, regardless of whether the Company requests you to work during this period or not^4,5; compensation for the value of a plane ticket back to your Home Country; and compensation for accrued holidays ² .

Note: Since severance dues and 30 days pay is calculated based on your last month's salary-----a sneaky trick some Company's try is two months prior to terminating you, they will present you with an option of a position change and salary reduction or termination from the Company; If a Company presents you with this option, changes are that they are likely planning on terminating your position from the Company two months from that date. Be aware that the Ministry and the courts are aware of this, as it is common for many Companies to execute this action towards their employees.

If your contract is limited and your Employer unjustly terminates that contract, they are required to compensate you for any damage sustained due to this abrupt termination (i.e., car loans, rent fees, etc.)^3,6, provided that the amount of compensation doesn't exceed three months paid salary or remaining period on the contract, whichever is shorter. However, if your contract with your employer is written that you have four months of paid salary upon termination----you are initialed to that amount.

Final Settlement after Termination

Under no circumstances, should you give your Company your passport or sign anything your Company asks you to sign prior to receiving a check for your final settlement as agreed upon; as if you do so and your Company doesn't pay you and cancels your visa, there is very little the UAE legal system can do to help you.

You and your Employer are in disagreement about your Final Settlement...

A few things to keep in mind and be aware of is if you proceed with the steps as described below, that it is not a quick process----be prepared to remain in Dubai a minimum of 6 months prior to receiving any money. Although, the ministry and court process will not occupy a large amount of your time---an average of 3 to 4 hours every two weeks. However, due to the uncertainties with respect to the other party---your Employer, it is difficult to make travel plans in advance. A few advantages are that you can work for another Company during this time, as all you need is to provide the Ministry of Labor with a letter from your new Employer stating that they are prepared to sponsor you for the next 6 months. You also don't need to worry about remaining in Dubai without a visa---as you are still under your previous Employer's visa during this process (as long as you didn't give them your passport already).

1. CALCULATE WHAT YOU ARE OWED BASED ON UAE LAW. If you are unsure, call the UAE Ministry of Labor Hotline (800 665) and request to speak to a legal advisor to provide you with calculated breakdown of the amount you are entitled to based on your contract, holidays taken, and years of service with the Company.

2. PREPARE AN OFFICIAL COMMENT---You will need to visit a typing facility and there are several throughout Satwa and also one is strategically located outside the Ministry of Labor building. Tell them that you wish to have an official complaint typed up for the Ministry, as they have standard forms for this at these facilities. Relay to them what it is you are in disagreement with your Employer about in relation to your final settlement dues. This service will cost a minor fee, which unfortunately various with respect to your gender and ethnicity, however it shouldn't cost more than 20 Dirham.

3. FILE YOUR OFFICIAL COMPLAINT. You will need to go to the Ministry of Labor with your complaint and your passport. Once you get into the building, go to the second floor and request that you wish to file an official complaint against your Employer for final settlement dispute. It is best to take an Arabic speaking friend with you, if possible. Also, try to file the complaint as soon as possible after disagreement with your Employer; as be prepared for them to do the same against you----and it will look better if you are the one who files a complaint first.

The Ministry will likely ask you a few questions about your termination, terms, contract and request contract details for your Employer. They will provide you with a date in which your requested to return to the Ministry, and send you with an official request notice which you are responsible to making sure your Employer receives prior to the date; you will need to fax a copy of the notice or it is best to present to them in person and request a Company stamp or signature in order to have documentation that they received the notice from you.

4. ATTEND A MEDIATION MEETING AT THE MINISTRY OF LABOR. You must then arrive at the Ministry of Labor on the designated date and time provided to you. The Ministry acts as a mediator between you and your Employer and let you both argue your case and they will in turn provide you with their recommendation.

If you the Company doesn't send their representative to the first scheduled meeting (which is likely the case), they will be provided two more chances. On the third occasion, if the Company doesn't show up, the Ministry will send somebody to their offices to find out why they haven't attended the meetings.

5. IF MEDIATION FAILS and both parties are not able to reach a compromise, the Ministry of Labor will likely recommend that you should take the matter to Dubai Courts. Once this occurs, they will provide you with another date to return to the Ministry of Labor in order to receive the documentation required to register for court.

6. OBTAIN THE MINISTRY OF LABOR'S DOCUMENTATION OF DISPUTE TO REGISTER FOR COURT. Once you return to the Ministry of Labor, they will provide you with documentation that you will need to register with the Dubai Courts and will send your file from the Ministry of Labor to the Ministry of Labor office located within the Dubai Court Building.

7. REGISTER FOR COURT. When you travel to the Dubai Courts, be sure to arrive early as there is little parking and the process takes a bit of time to complete, so if you arrive too late you will end up having to travel back to the Court the next day to complete otherwise. The labor office will request that you make a copy of your Ministry complaint, and you will be required to take the copy with you to the typing office located in the Court Building in order to get your Court Claim typed up---which expect to take some time as the lines are long and also expect a fee of 20 AED. Once you have your Claims typed, you will need to travel back to the Ministry of Labor office to provide them a copy and then take both documents to the booths on the first floor in order to get your case registered. Once registered in the system, they will provide you with a sticker of your designated court date, time and chamber.

Also, note that you should also provide them a map of where your Employer's office is located, as otherwise they won't be able to deliver the summons to the Company and precious time will go by as you won't know whether or not the Courts were able to find the Company to deliver the summons until your designated court date.

8. PREPARATION FOR COURT APPEARANCE. Anything that you wish to present to the judge as evidence, prior to the court date you need to pay a local typing office to translate everything into Arabic. Be prepared for some large costs-----as the offices charge roughly 150AED per page (note that one page of English is equal to two pages in Arabic); thus if you are required to get a 30 page contract translated from English to Arabic is going to cost you 9,000.00AED (~2,430.00USD). However, be aware that the judge already has all the information in your file from the Ministry of Labor---including your original labor contract with the Ministry and their recommendations, so there is no need to worry about presenting these items to the judge.

9. COURT SESSION. On your court date, you will sit in a smaller room with about 20 people. There is a designated judge with a panel of three other individuals who will sit and hear your case. The entire procedure and schedule of appearances in is Arabic----however if you don't know Arabic they will provide a translator for you upon when your individual case is called. Once standing before the judge, he asks a question or two and the Company will likely ask for an extension to provide documents against your case. The judge will give the entire group of cases a new date, roughly 3 to 4 weeks from the date, in the same room and the same time. Each time you appear to the next court date, the same group of people is present, and continues on until all their cases are settled.

10. JUDGMENT. Once both parties have presented all their information to the judge and have nothing else to add, he will ask whether you are ready for his judgment. Once you agree, following the court session you will be requested to proceed downstairs to the judgment room---which depending on the complexity of the case---you will either receive a notice to return on a particular date to the same court room at the same time. At that time, the judge will provide his ruling either in the court room or immediately preceding the court session in the judgment room. You will then be provided with a figure the judge has agreed upon for you---and return in a week to the judgment room to collect an official copy of the judge's reasoning behind his judgment; however it is entirely in Arabic so find a friend who knows Arabic to help translate it for you.

11. APPEALS. Once you receive the judge's written decision, you and your Employer will have 30 days to appeal this decision.

12. SETTLEMENT. If neither party appeals the decision, then your Employer has 30 days (starting from the end of the initial 30 days given for chance to appeal) to provide the court a check for the amount the judge ruled them to pay---which they will in turn give to you.

UAE Labor Law References

^1. Chapter I, Article 7:"Any conditions contrary to the provisions of this Law, albeit precedent to the date of effectiveness, shall be null and void unless they are more advantageous to the worker."

^2. Chapter IV, Section II, Article 79:"A worker who is dismissed or who leaves his job after the period of notice prescribed by law shall be paid for any accrued annual leave days. Such payment shall be calculated on the basis of the worker's wage as on the date when the leave became due".

^3. Chapter VII, Section I, Article 115: "Where an employment contract is for a definite term and the employer revokes it for reasons other than those specified in Article (120) he shall be required to compensate the worker for any damage the latter sustains, provided that the amount of compensation shall in no case exceed the aggregate wage due for a period of three months or the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract".

^4. Chapter VII, Section I, Article 117:

"1. Either the employer or the worker may terminate an indefinite term contract for a valid reason at any time following its conclusion, by giving the other party a notice in writing at least 30 days prior to termination".

^5. Chapter VI, Section I, Article 119: "If either the employer or the worker reduces the period of, or fails to serve a notice of termination on the other, the forbearing party shall pay the other a "compensation in lieu of notice", irrespective of whether or not the other party has sustained damage as a result of such failure or shorter notice. The said compensation shall be equal to the worker's wage in respect of the entire or reduced period of notice. Compensation in lieu of notice shall be calculated on the basis of the last wage received, in the case of monthly, weekly, daily and hourly paid workers, and on the basis of the average daily wage referred to in Article 57 of this Law in the case of those paid on piecemeal."

^6. Chapter VII, Section I, Article 123:

"Where a worker is arbitrarily dismissed, the competent court may order the employer to pay him a compensation, to be assessed by the court with due regard to the nature of the work, the extent of damage sustained by the worker and his period of service, and after investigating the work circumstances, provided that such compensation shall in no case exceed the worker's wage for three months, calculated on the basis of his last wage."

^7. Chapter VII, Section II, Article 132: "A worker who has completed one or more years of continuous service shall be entitled to severance pay at the end of his employment. The days of absence from work without pay shall not be included in calculating the period of service. The severance pay shall be calculated as follows:

• 21 days' wage for each of the first five years of service.

• 30 days' wage for each additional year of service provided always that the aggregate amount of severance pay should not exceed two year's wage.

^8. Chapter VII, Section II, Article 133:"A worker shall be entitled to severance pay for any fraction of a year he actually served, provided that he has completed one year of continuous service. "