Sacked without reason? ‘Redundancy’ not valid reason for dismissal: legal experts

Many employees in the UAE, especially when the economic crisis started eating into the profits of businesses in the country, were faced with a similar problem – sacked one day without any clue about what to do next.

Emirates 24 / 7 spoke with legal and employment experts on what an employee can do in such a situation.

In one of its employment bulletins, Clyde & Co highlights the rights of the employees upon termination (employment relations in the Dubai International Financial Centre other free zones in the UAE have their own rules).

The bulletin elaborates on the grounds when an employee can consider his dismissal as unfair. “Under the Labour Law, an employee will be deemed to have been arbitrarily dismissed if he was dismissed for a reason unconnected to the work. This implies that an employee may only be dismissed on grounds of performance or misconduct.”

“The concept of ‘redundancy’ is not recognised in the UAE and, therefore, strictly speaking is not a valid reason for dismissal under the Labour Law. However, the UAE Labour Courts have recognised the employer’s right to restructure their business,” it mentions.

“If the dismissal was unfair and the employee hasn't been paid his entitlements, then the employee should seek recourse through the Ministry of Labour's complaints process and the Labour courts, who, will take complaints seriously and rule in favour of an employee if he or she has been treated unfairly and unlawfully,” Sara Khoja Senior Associate, Employment and Incentives Group at Clyde & Co LLP, told this website.

According to Samir Kantaria, Partner, Head of Employment at Al Tamimi & Company, “If an employee has been dismissed for no clear reason then, depending on where he is employed (onshore UAE or free zones), he can file a complaint for arbitrary dismissal with the relevant authority (Ministry of Labour for onshore employees and the free zone authority for others). This would not apply in the DIFC which operates under a separate employment law. If the ministry or the free-zone are not able to settle the matter, it is likely that they will refer the matter to the courts for determination. If an employee has been found to be arbitrary dismissed, the law provides that he may be awarded up to a maximum of three month salary as compensation. Arbitrary dismissal is seen as a termination that is not related to performance.”

“It depends on the case: if someone has been fired on valid reason (for instance, low performance from his side, or financial problems of the company that needs to proceed to lay-offs, or mismanagement/fraud from his side, or abortion of the project he is working on etc), then there is nothing much to fight about," argues Konstantina Sakellariou, Partner, Marketing & Operations Director at Stanton Chase.

"Of course, if being laid off is part of an unfair internal process, based on internal politics, discrimination etc, then one may wish to fight back. In this case, the results may be ambiguous, still one may wish to fight back and ask the support of the legal system in the UAE and the respective authorities. Finally, one reason to fight about is to secure one’s rights when fired (if they are at risk and the company is not fulfilling its obligations based on the UAE law and the contractual agreement),” she adds.

Law of process

For those who have been given the pink slip may wish to look what all the Labour Law states. According to Clyde & Co, it contains an exhaustive list of circumstances in which the employer can dismiss an employee without notice (regardless of the type of contract in place). In all other circumstances the employee will be entitled to receive notice upon the termination of his employment.

If the employee thinks he has been treated unfairly then he/she has one-year from the alleged breach taking place, or the entitlement falling due, to raise a complaint. Thereafter his claim will be time barred, the law firm says.

“An employee must first complain to the Ministry of Labour or the relevant free zone authority (the Labour Department). The Labour Department will attempt to reach an amicable resolution, failing which the matter will be referred to the Labour Court.

“Proceedings in the Labour Court can be time consuming and it can take months to obtain an outcome (which parties often appeal). The Labour Courts are very stringent about the requirement for clear documentary evidence of a party’s case and no oral witness evidence will be considered.

“There is no formal conciliation mechanism in the UAE to resolve labour disputes or circumvent the submission of formal complaints. Once a dispute has reached the Labour Court, any settlement of the claim must be negotiated between the parties. The concept of ‘without prejudice’ discussions is not recognised in the UAE. Accordingly, settlement discussions must be approached very carefully.”

The legal route

The option of legal course can be considered but it is advisable to look for other ways to deal with the company one is working for, advise experts.

“There are some basic steps which can help reduce the risks of labour claims being raised, or at least place the employer in a stronger position to defend any claim raised. These include implementing comprehensive contracts of employment, having clear and consistently applied policies and procedures, and complying with the basic requirements of the Labour Law,” elaborates the employment bulletin of Clyde & Co.

“I would say this depends on intent. If one wants to stay on, then consult an employment lawyer if you cannot get the decision over-turned. If you want to move on, then it matters less. However, you should do your best to have positive references from all your previous employers,” said Hasnain Qazi, Middle East Business Manager, Huxley Associates

Trakhees the organizational arm of Ports, Customs and Free Zone Corporation (PCFC) Dubai

Trakhees the organizational arm of Ports, Customs and Free Zone Corporation (PCFC), services & facilities contribute to a healthy environment, nurturing business development and keeping abreast of commercial developments spanning the Emirate of Dubai.

Out of its desire to deliver top-class services to stakeholders & customers, PCFC established Trakhees as the entity responsible for licensing engineering & commercial services activities for individuals and companies operating under its umbrella and will enhance the conduct of business, render licensing a smooth and comprehensive process. PCFC manages & oversees a massive portfolio of projects in the diverse fields of real estate, shipping, industrial complexes, investment, and finance, among others. Trakhees licenses and monitors a host of business activities spanning commercial, engineering, environmental, health, and safety fields. In the field of commerce, it provides existing & new customers with licenses, registration and approvals required for the conduct of business. Trakhees can also provide governmental services, such as employment & visit visas, and handle consulate affairs and related services.

In the field of civil engineering, Trakhees provides customers and stakeholders with regulations of the highest quality applicable by PCFC in building design and construction, carried out with sophisticated electronic applications. Environmental, health and safety regulations & guidelines enforced by Trakhees reflect the best international practices applicable.

EHS Regulations

This document of EHS Division is comprised of (i) Environmental Regulations (ii) Design and Development Regulations (iii) Construction Safety Regulations (iv) Industrial Operations Regulations (v) Ports Operations Regulations (vi) Green Building Regulations(vii) Commercial and Retail Operations Regulations(viii) Fire Protection, Fire Prevention & Fire/Emergency Control Regulations and (x) Food and Health Regulations having the force of law and are applicable to all Business Units of Dubai World and to their clients and stakeholders operating within the jurisdiction of Trakhees-Ports, Customs & Free Zone Corporation. These regulations [setting out standards and specific requirements for ensuring high level of safety of people, property, equipment and environment against the risks & hazards associated with industrial and commercial operations] are issued pursuant to the Article (4) of the Decree No. (22) of 2009 issued by His Highness Sheikh Mohammad Bin Rashid Al Maktoum.

Where so cross referenced/expressed, this document shall be read in conjunction with other Trakhees regulations and statutes/laws of the governments of Dubai and UAE

The EHS Division, as an authority, operates under a system of prior and continuous approval and no operation may commence until the facility/operations have been inspected and the authority is satisfied that the facility meets its requirements and is fit to operate. When the authority is satisfied with the facility and operational/ health, safety & environmental controls, then an Operation Fitness Certificate shall be issued by its competent officials. The licensee/lessee are also responsible by the Law under Ministerial Decision N. (32) of 1982 and other federal/state regulations, for the protection of their labor/staff from risks at work, injuries, disease, fire, etc. that may result, and he must take the appropriate precautions to the satisfaction of the authority.

Relevant international codes and standards viz., Health & Safety Executive (HSE- UK), OSHA, NFPA, IAEA, API, IP, ASME, IGEM and ASHARE have been adopted by reference into these regulations to deal with any specific requirements that are not, otherwise, covered by the criteria or the provisions of these regulations.

Inspectors, Officers & Managers of EHS Division are authorized to make visits to all facilities/operations to ensure that the standards and requirements are being met. During these visits, unsatisfactory circumstances may be found, which need correction and these are drawn to the attention of the senior management of the concerned company. Should any company/lessee not respond positively to notifications from EHS, then EHS will be constrained to take necessary actions or apply appropriate sanctions to ensure a safe and clean environment.

All the business units and their clients/stakeholders are advised to study this document minutely; and I look forward to their cooperation to enhance Environment, Health & Safety Standards.

Note: EHS Standards and Regulations are subject to revisions on a regular basis. Please make sure that you are viewing or downloading the latest revisions.

New UAE companies law expected to lift the foreign ownership ceiling from the current 49 per cent

Abu Dhabi: A new UAE companies law that is expected to lift the foreign ownership ceiling from the current 49 per cent in certain businesses could be introduced this year, Minister of Economy Sultan Bin Saeed Al Mansouri said.

"It could be any time this year. At the ministry level, our work is done," Al Mansouri told reporters yesterday on the sidelines of the 5th Annual GCC Regulators Summit. Al Mansouri said the ministry has finalised the draft and is waiting for approval from the UAE authorities concerned.

Experts say the introduction of the new companies law will help attract more foreign investments and give a boost to the local economy and employment.

The UAE Companies Law allows foreigners a maximum stake of 49 per cent in companies outside free zones.

However, foreigners are allowed 100 per cent in companies registered within the free zones. The new law will also make it mandatory for companies to create a general corporate governance framework.

The legislation is part of a move to modernise the UAE's company, foreign investment and industrial laws to boost transparency and investor confidence.

Separately, Al Mansouri in his speech at the regulators summit said that after the financial crisis regulators are assuming increasing roles to strengthen the financial sector.

"The regulatory role is under reform in many countries to touch all bases including systemic stability, micro prudential regulations, conduct of business and consumer protection," he said.

Preparedness

"Regulators need to be proactive by being prepared for adverse outcomes, and need to be reactive to the needs of the industry. The world is still learning from past experiences and evidence shows that the regulatory process is an evolving one," he added.

He said the GCC countries have distinctive regulatory needs since the financial sector in the GCC is developing at an unprecedented pace.

"Regulators need to tackle issues like introducing new instruments besides the pure longing of stocks of listed companies, improve mechanisms like delivery versus payment (DVP), auxiliary tools like security lending and borrowing, licensing new financial services like investment management and regulate existing practices like rating agencies, auditing firms and research and financial analysis services," he said.

New company law by end of 2011, says Al Mansouri UAE Minister of Economy

Abu Dhabi: A new company law is awaiting government approval, a top official said on Wednesday.

A draft Companies Law is with the government for consideration, Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, told reporters on the sidelines of a conference in Abu Dhabi.

He said, it will go through a process of scrutiny and verification and ammendments till it is passed by the government.

“It could be issued before the end of this year,” he said.

UAE’s Commercial Companies Law allows foreigners a maximum of 49 per cent stake in companies outside free zones. However foreigners are allowed 100 per cent stake in companies registered within the free zones.

The move will help the UAE to attract more foreign investment that could boost local employment and help the economy grow, analyst say.

Per second billing approved for etisalat mobile subscribers

Etisalat, du working on common landline services and ending location monopoly: TRA chief

Etisalat will start charging mobile phone subscribers per second for calls, reported Arabic newspapers. Mohamed Nasser Al Ghanim, Director-General, Telecommunications Regulatory Authority (TRA), said etisalat has been given the approval to charge subscribers per second for the calls they make. This is to ensure healthy competition in UAE telecommunications market.

The TRA's role ends with giving approval for services, the price packages. The time of implementaion is up to the operator to decide, he added. Franchise rights are imposed by the Ministry of Finance and TRA does not have a say in that, Ghanim said.

According to latest estimates, etisalat has about 47,000 'distinguished subscriber's whom it charges per second for mobile phone calls.

Meanwhile, TRA will meet with representatives of etisalat and du separately to discuss strategic plans for the next three years, Ghanim said and added that both the telecom operators are curently working on offering common landline telephone and internet services. They are working towards opening terrestrial networks by the year-end and ending geographic monopoly, he said.“The two companies recently have begun testing systems, communications networks before starting to extend the area of operation to include all areas of the UAE,” said Ghanim.

"The TRA oversees direct negotiations between the two companies," he added.

In UAE six-month employment ban is still very much in force

Ministry says new law only makes job shift more flexible as it turns down several requests.New rules enforced by the UAE at the start of 2011 allowing workers to shift to another job still include a six-month ban on those who do not fully abide by the specified terms, the ministry of labour has said.

In a statement carried by the Arabic language daily Alkhaleej on Sunday, the ministry said it turned down applications in January by many workers who had left their employers and wanted to move to another sponsor because they failed to justify their move.

“Those workers mentioned some mistakes committed by their employers but they did not comply with the new cabinet decision nor did they know the measures that govern such a decision or the terms needed to be met in order to get consent by the ministry for their shifting to another employer,” it said.

The statement said the ministry found that those workers had quit their jobs without any real reason, trying to benefit from the new job transfer measures without clearly understanding them.

“This prompted the ministry to impose a six-month ban on them because an exemption of this ban will be granted only under the new regulations…the six-month ban is still in force but the new decision was introduced only to add some flexibility to job transfer under certain conditions and rules which should be enforced by the ministry of laour without any exception,” it said.

“Such condition must mainly include that the work contract between the employee and the employer should be terminated with the consent of both parties and the worker has competed at least two years in the job with that employer.”

But the ministry said such a condition could be excluded in case the employer breaks terms of the contract or fails to pay workers their wages for at least 60 days. Workers can also apply for transfer in case their establishment has shut down.

“Another case involves a court suit against the employer by the employee provided the court issues a sentence in favour of the employee…in any case, the worker should not quit the job without any reason or justification as this will result in a six-month ban.”