The new UAE Federal Decree Law No. 33 of 2021 on the Regulation of Labor Relations (the “New Labor Law”) will take effect on February 2, 2022. Federal Law No. 8 of 1980 (as modified), sometimes known as “Federal Law No. 8 of 1980,” will be replaced by the New Labor Law.

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Except for the free zone businesses in the Dubai International Financial Centre and Abu Dhabi Global Market, the New Labor Law is applicable to all private sector organizations in the United Arab Emirates. It makes a number of constructive adjustments that improve the working environment.

With this significant advancement, the UAE has shown its commitment to harmonizing its employment laws with rising market norms and accepted international standards.

This article gives a concise review of some of the most important New Labor Law regulations regarding the immediate termination of workers (Article 44) and the temporary suspension of an employee (Article 40). It compares the aforementioned two articles to the rules outlined in Federal Law No. 8 of 1980 and highlights the modifications made by the New Labor Law. We also provided some information on the prior stance taken by UAE courts, which is expected to alter once the New Labor Law is put into effect.

Termination without Pre-Action Notification

The New Labor Law’s Article 44 addresses the prompt and unannounced termination of employees. It stipulates ten (10) distinct instances/circumstances under which an employer may fire and dismiss an employee, including the following:

  • If an employee presents fraudulent identification or falsified documentation;
  • If an employee makes a mistake that results in substantial losses for the employer or intentionally damages employer property, and the employee admits to the mistake, and the employer reports the event to the Ministry of Human Resources within seven (7) working days of becoming aware of it;
  • if a person disobeys workplace norms and regulations pertaining to safety precautions while being aware of such requirements;
  • if despite receiving two warning letters from the employer and a formal investigation against the concerned employee, the employee fails to execute the tasks outlined in their employment contract;
  • If an employee divulges private knowledge about commercial or intellectual property that harms the business or eliminates a potential for the employee to profit personally;
  • If an employee violates public morality while at work, or if they are discovered to be intoxicated or under the influence of drugs;
  • if the worker assaults the employer, manager, supervisor, or other coworkers in any way that is prohibited by the legislation in effect;
  • if the employee misses more than seven (7) consecutive days of work or more than twenty (20) intermittent days of work in a year without good reason.
  • if an employee misuses their position for their own financial advantage;
  • if the employee leaves the company and works for another one without following the specified processes.

The conditions for the same rapid termination were addressed under Article 120 of the former Federal Law No. 8 of 1980. Some significant distinctions between the terms of summary dismissal under the New Labor Law and those of Federal Law No. 8 of 1980 on this subject include:

The New Labor Law goes into detail on the steps that must be taken if an employee is let go without cause. The employer is required to undertake a formal investigation and to send the employee two different warning letters if the employee refuses to carry out the tasks specified in the employment contract. The earlier Federal Law No. 8 of 1980 did not provide that two (2) warning letters be sent.

An employee may be fired under Article 120 of Federal Law No. 8 of 1980 during or after the probationary term (b). This situation is no longer mentioned as an event for the instant termination of the employee since the New Labor Law deals with the probationary period separately under Article 9 and specifies the method of terminating the employment contract during the probation.

Instant Dismissal

One important change made by the New Labor Law is that if a worker is subject to instant dismissal for any of the reasons outlined in Article 44, the employer cannot withhold the end-of-service gratuity of that employee. Previously, if an employee was let go in accordance with Federal Law No. 8 of 1980’s Article 120, the situation was different. The employee was not eligible to request a gratuity at the conclusion of their employment under such conditions.

The UAE Courts have already adopted this stance in order to rule in accordance with Articles 120(e) and 139(1) of the Federal Law No. 8 of 1980. The decision was to uphold the employer’s right to fire an employee without cause and withhold their end-of-service bonus if it can be shown that they have violated their basic obligations under their employment contract. This is as long as they have undergone a written investigation and have been warned that a subsequent violation will result in termination (Dubai Court of Cassation No. 163-2020 (Labor) 12.01). The New Labour Law now supports the employee in receiving their service benefits whether or not they are liable to abrupt termination by the employer.

Disclosure of Sensitive Information

The New Labour Law goes into more detail about an employee’s disclosure of sensitive information than the Federal Law No. 8 of 1980 does. If the employer suffered a serious loss or a missed opportunity as a result of the employee’s exposure of sensitive information, the employee may be fired without cause and without prior warning. In accordance with the old Federal Law No. 8 of 1980, the employer had the right to terminate the employee’s employment immediately if the employee disclosed any secret information without providing any more details. For instance, it did not explicitly indicate that the company must have suffered financial damage as a result of the employee’s disclosure of information. Now that it relates to industrial and intellectual property information that causes injury, a loss of opportunity, or a personal advantage for the employee, the New Labor Law is more precise.

According to Federal Law No. 8 of 1980, if an employee commits a mistake that results in a significant loss of property and the employer notifies the Ministry of the incident within 48 hours of becoming aware of it, summary dismissal of the employee is legal.

According to Dubai Court of Cassation No. 148-2020 (Labor) 24.11.20, the employer waives his right to fire the employee for the occurrence if he fails to provide notice of it within the required time frame. The time frame for reporting to the Ministry has been extended by the New Labor Law’s Article 44(2) from 48 hours to seven (7) working days after becoming aware of the event.

Additional two Reasons

The New Labor Law expanded the list of reasons for firing an employee without cause by adding two more. The New Labor Law’s Article 44 (9) addresses situations in which an employee takes advantage of his position to benefit personally and financially. A worker may also be fired in accordance with Article 44(10) of the New Labor Law if they transfer to another establishment without following the necessary procedures.

Article 40 of the New Labor Law addresses temporary suspension from employment. Article 112 of the preceding Federal Law No. 8 of 1980 addressed interim suspension.

The New Labor Law describes the procedure to be followed by the employer in order to temporarily suspend the employee from work, in contrast to Federal Law No. 8 of 1980.

The following are the main distinctions between the two laws regarding temporary suspension from employment:

  • According to the New Labor Law, the employer may temporarily suspend the employee for a maximum of thirty (30) days in order to conduct a disciplinary inquiry. The employee will be suspended at this time yet still get half pay. The employee is entitled to wages throughout the suspension time even if the infringement is not shown to be their fault. This is a significant deviation from Federal Law No. 8 of 1980, which did not provide a deadline for the employer to conduct the inquiry.
  • Additionally, it specifies that the suspension period runs from the day the event was reported to the authorities until a conclusion has been reached by them. Similarly, the Federal Law No. 8 of 1980 did not specifically provide that the employee should receive half pay while the company conducted an inquiry.
  • According to Article 40(2) of the New Labour Law, the employee must report back to work and receive payment for any salaries that were owed during the suspension period if the employee is found not guilty by the appropriate judicial body or the inquiry is thrown out.
  • Contrarily, and in accordance with Article 112 of Federal Law No. 8 of 1980, an employee must establish that his suspension was the result of an employer’s arbitrary action in order to be entitled to his income for that time period. In other words, even if the Public Prosecution determines that there are insufficient grounds to file a criminal charge against the employee, it is the employee’s responsibility to provide evidence that the employer made up the claim on purpose. (Cassation No. 115-2012 (Labor) from the Dubai Court of Cassation, issued March 5, 2013). The employee is no longer necessary to demonstrate that his employer committed any wrongdoing under the New Labor Law.

The New Labor Law permits suspension starting from the day of making the accusation that the employee committed a criminal offence, as opposed to the previous law’s suspension starting from the date of reporting to the authorities. A formal allegation of a criminal offence is often made through Public Prosecution.

Conclusion

Without a doubt, the New Labor Law takes into account the demands of the highest standards in employment practice. It aspires to promote the greatest industrial advancement and labor market efficiency. The New Labor Law marks a turning point in balancing the interests of the employer and the employee.