UAE employee on unlimited contract is made redundant, what benefits are due?

I work for a group of companies on a local unlimited contract. I have just been verbally told they are going to cancel my contract and my last working day will be August 20. The company’s reason is that they cannot afford to keep me on any more. I have not received any written warning about this. They are going to pay me until the end of August and that’s it. I will then only be entitled to my gratuity. Have I got any more rights? Are they allowed to terminate my contract like this? I read online that I should be compensated with three months’ salary if the labour contract is terminated for any other reason than stated in article 120 of the labour law. SM, Dubai

If someone is on an unlimited contract they can be made redundant by being given written notice in accordance with the terms of their contract, usually a period of 30 days. Verbal notice may be accepted, but it should be put in writing at least 30 days prior to leaving service. Article 120 of UAE Labour Law is in respect of redundancy without notice and does not apply in this case. An employer can make an employee redundant without issue if they are unable to afford to continue employing them, and no compensation is payable. There is only an issue if someone else is employed in that person’s place, as that could then be construed as arbitrary dismissal. If it transpires that the redundancy is not for financial reasons or due to the individual’s work, then the employee can raise a case, and if they win compensation could be payable. An employee who is made redundant will not receive any ban and is due any end of service gratuity or holiday payment that has accrued in full.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE.


The advice provided in our columns does not constitute legal advice and is provided for information only. Readers are encouraged to seek appropriate independent legal advice.

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