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Home > Legal View
 
Free zones not governed by UAE Labour Law

Mushtaq Ahmad Jan / 24 December 2012



I have been working in a free zone company here for the past 2.5 years. Can the employer ban me from working in the UAE if I change my job? Please advise.

Generally, free zones are not governed by the UAE Labour Law. Each free zone has its own employment law. Furthermore, you will not be subject to an employment ban as you have completed two years with your current employer. Bans are for those labourers who have entered into two-year contracts or unlimited contracts and terminate their contract before its expiry i.e. before completion of two years with their current employers. Therefore, you will not face any labour ban.

My husband was working in a ship maintenance firm for over 26 years. While we were on vacation, he was terminated based on customer complaints. He was asked to sign a termination letter. Can we approach the labour department against this injustice. Is he entitled to notice pay? Is he entitled to a severance package and family return ticket?

Since your husband was working on an unlimited contract and if his employment was not terminated for any reason mentioned in Article 120 of the UAE Labour Code, then he is entitled to compensation for arbitrary termination in accordance with Article 123 of the UAE Labour Law, which states:

a. “If the employee has been arbitrarily dismissed, the competent court has the jurisdiction to give judgement against the employer for payment of compensation to the employee.

The court shall determine the amount of this compensation, taking into consideration the nature of work sustained by the employee, period of service, after investigation of dismissal circumstances. Provided that in all cases the amount of compensation should not exceed the employee’s pay for a period of three months, it will be worked out on the basis of last pay due to him.

b. The provisions of the preceding clause shall not prejudice the employee’s entitlement to the gratuity due to him and notice period provided for in this law.”

Furthermore, he is also entitled to end-of-employment benefits as per his employment contract or last received salary and other end-of-employment benefits,  which are provided by the UAE Labour Law in accordance with Article 132 which states: “The employee who has completed one year or more in the continuous service, is entitled to the end of service remuneration at the end of his service. Days of absence from work without pay are not included in computing the period of service, and the remuneration is to be calculated as follows:

1. Twenty one day’s pay for each year of the first five years of service.

2. Thirty days pay for each additional year, provided that the entire total remuneration shall not exceed two year’s pay.”

Is the salesman responsible for the stock of materials lying in the yard at the time of resignation if the materials are not collected by the customers, whom the salesman was handling? I have already submitted my job responsibilities form and department clearance which the management has accepted and now they are not giving my gratuity saying that I have to pay the company for the materials which customers did not collect. Is this legal?

Material violation by an employee comes under the disciplinary rules which are described in Articles 102 to 112 of Labour Law.  The Labour Law of the UAE provides extensive rules and regulations to deal with disciplinary action, imposing disciplinary penalties and provide in-detail procedures for taking such action and its limitations. For instance, Article 102 states:

“Disciplinary penalties which may be imposed by the employer or its agent upon its employees are as follows:

1.Warning; 2. Fine; 3. Suspension from work with reduced pay for a period not exceeding ten days;  4. Forfeiture of deferment of periodic increment in establishments where such increments system is applied; 5. Forfeiture or deferment of promotion in establishments where promotion system is applied; 6. Dismissal from service but reserving right to end of service benefits; 7. Dismissal from service together with forfeiture of all or part of the benefits, provided that penalties shall not be imposed for reasons other than those specifically prescribed in Article (120) of this Law.”

The above-mentioned Article provides a step-by-step process for disciplinary action and imposing penalties; therefore, it is necessary to follow all steps properly.  According to the UAE Labour Law, the company must send a warning letter in advance, and then impose a fine.  In other words, every deduction from an employee under disciplinary penalties is linked with an offence. If there is no offence, no deduction should be made, and proper procedure as mentioned in Article 102 must be followed. 

Article 110 describes the procedure for taking disciplinary action against an employee in the following words:

“Any of the penalties prescribed in Article 102 may not be applied on the employee unless he is notified in writing of the charge taken against him, and unless his statement is heard and his defense is investigated and unless all that is recorded in a report kept in his personal file.”

Therefore, all the steps as mentioned in Article 110 must be followed and in case if steps were not properly followed, then employer is committing a violation of the law, thus cannot deduct the amount from the employee.

Furthermore, employers are not at liberty to deduct from the salary of the employee in sole discretion. In this regard, Article 104 of the Labour Law imposes a maximum limit for a single offence. Thus, a fine for a single offence shall not exceed five days’ remuneration of an employee.

“A fine may be a certain amount of money or an amount equal to the remuneration of the employee for a certain period of time.  A fine in respect of a single offence shall not exceed remuneration payable for five days.  It is not permissible to deduct within one month an amount equal to more than five days pay from the employee’s remuneration in settlement of fines imposed upon him.”

Article 111 puts a time limitation for imposing disciplinary penalties.

“An employee may not be charged with a disciplinary offence after the lapse of thirty days from disclosure of the same, nor may a disciplinary penalty be imposed after the lapse of sixty days from closing of investigation on the offence and finding an evidence against the employee.”


 Mushtaq Ahmad Jan is a lawyer at the Global Advocates and Legal Consultants, with a Master’s Degree in International Commercial Law from the University of Hull, Kingston-upon-Hull, England. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

Compiled by Ahmed Shaaban

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