Wednesday, April 6, 2011

workers entitled to end fixed contract if companies shut down or end operations before the expiry of employment contracts-Dubai Court of Cassation

Companies that shut down and end operations before the expiry of employment contracts signed between them and workers is legally entitled to end working relationship, without considering it as arbitrary termination, ruled Dubai Court of Cassation.

The Court confirmed “the non-availability of the grounds provided for in Article 120 of the Labour Code, does not take away the right of employers to terminate the contract of fixed-term with his employees as long as they have the justification for such decision".

The Article 120 of Labour Code specifies cases wherein employers may terminate employment relationship with workers, in cases such as the latter not passing probationary period or violating instructions of work safety, or disclosing secrets of work, or if they involve in any crime, etc.

The Court of Cassation was hearing the appeal of a verdict of a case involving an Executive Director of a Dubai free zone company.

The plaintiff asked the court to oblige the company where he worked to pay him Dh493,000 (Dh150,000 as six months' salary; Dh170,000 compensation for unfair termination; Dh13,000 transportation allowance; Dh50,000 as housing allowance).

He also requested Dh5,000 half-annual allowance; Dh10,000 in tickets; Dh35,000 as end-of-service benefits; Dh26,000 instead of warning; Dh14,000 equivalent to the period of 17 days from the last month for working before being fired.

He said in his lawsuit that he had joined the company on a fixed-term contract for two years, at a monthly salary of Dh25,000 but was surprised with the decision of dismissing him after six months.

The Court of First Instance earlier ruled to dismiss the case. Later the Court of Appeal upheld the ruling of the Court of First Instance. However, the plaintiff did not accept either ruling and challenged the same before the Court of Cassation.
The Court of Cassation, in turn, accepted one request on the appellant - that of Dh14,000 for working for a period of 17 days - and rejected the other requests. The court said the appellant is eligible to receive Dh14,000.