UAE: Is it legal to fire an employee as a cost-cutting measure?

Dubai - If your employer can prove that they are compelled by economic challenges, then your termination may not be considered as arbitrary dismissal.

Question: I was recently fired from my job in mainland Dubai. I was good at what I did and have even received certificates from my company for good performance. The company fired me, claiming it was a cost-cutting measure. Can I file a case against my firm for arbitrary dismissal? Can you explain the law points around arbitrary dismissals?

Answer: Pursuant to your queries, as you are employed by a mainland firm based in Dubai, the provisions of Federal Law No. 8 of 1980 Regulating Employment Relations in the UAE (the 'Employment Law') are applicable.

In the UAE, an employer may terminate an employee on various valid grounds, including but not limited to disciplinary actions, poor performances, long-term health issues and genuine economic challenges. However, if the employee feels that his termination is arbitrary and not based on one of the aforementioned reasons, he may approach the Ministry of Human Resources and Emiritisation (the 'MOHRE') and thereafter, the court which has jurisdiction to hear the matter if necessary.

This is in accordance with Article 122 of the Employment Law, which states: "Termination by the employer of an employee's service is considered arbitrary if the cause for such termination has nothing to do with the work. In particular, termination is considered arbitrary if the employee's service has been terminated on grounds, or a reasonable complaint lodged by him to the competent authorities, or on grounds of a justifiable action brought by him against the employer."

If your employer can prove that they are compelled by economic challenges to cut costs, then your termination may not be considered as arbitrary dismissal. However, if your employer is unable to prove economic challenges for cost-cutting then the termination may be considered as arbitrary. The Employment Law is silent on cost-cutting as a ground for termination.