Can companies avoid layoffs? What UAE law allows employers to do
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Question: As you know, many measures are being considered as companies navigate regional tensions.
Under UAE labour law, can you explain the legal framework around alternatives to termination? What are these options, and how can employers use them to retain staff?
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Answer: Pursuant to your queries, the provisions of the UAE Employment Law.
In the UAE, an employee is entitled to receive salary and statutory leave benefits in accordance with the provisions of Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations (the “Employment Law”). Under Article 22(2) of the Employment Law, the salary must be paid by an employer in accordance with an employment contract and the applicable regulations.
“2. The employer is obligated to pay the salary to his employees on the due dates in accordance with the systems approved in the ministry and the conditions, controls and procedures specified in the Executive Regulation of this decree by law."
Further, Article 29 of the Employment Law provides for annual leave with full pay and states that:
“Without prejudice to the employee's rights acquired for the period preceding the date of enforcement of the provisions of this Decree by law, the employee shall be entitled to an annual leave with full pay of not less than: a. Thirty days for each year of his extended service.”
Accordingly, an employer is required to grant statutory leave with pay as prescribed under the Employment Law, and any adjustment on leave without pay or any reduction of salary would require the consent of an employee and an amendment to the employment contract in accordance with the applicable regulations.
In the current regional scenario, including economic uncertainty that may arise from geopolitical tensions, there are no specific temporary provisions or exemptions introduced under the Employment Law.
As such, an employer must continue to rely on the existing legal framework and mutual agreement.
Accordingly, an employer seeking to retain an employee may propose alternative arrangements such as sending an employee on unpaid leave or any reduction of salary.
Any such alternative arrangements should be agreed by an employee. However, in the absence of an employee’s consent, an employer may either continue employment under mutually agreed existing terms or proceed with termination in compliance with statutory requirements, including notice and settlement of all dues.
Applicable laws:
Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations.
Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.
Disclaimer: The information provided above is intended for general guidance and does not constitute legal advice. It is recommended to seek formal legal counsel.
