Home / Arbitrary Dismissal
If you were dismissed for an unlawful reason, compensation of up to three months' pay sits on top of everything else you are owed.
Last reviewed: · General information, not legal advice
UAE labour law distinguishes between a dismissal that is simply unwelcome and one that is unlawful. An employer may generally end a fixed-term contract by serving the contractual notice — that is lawful, even if you disagree with it.
A dismissal becomes arbitrary when the real reason is illegitimate. Under Article 47(1) of Federal Decree-Law 33/2021, termination is unlawful if it is because the employee filed a serious complaint with MOHRE or a lawsuit against the employer that is proven valid. (The broader "reason unconnected to the work" test came from the repealed 1980 labour law.)
Where arbitrary dismissal is established, the court may award fair compensation of up to three months' wage, calculated on your last wage (Article 47(2)),, on top of your notice pay and gratuity.
| Situation | Lawful? | What you receive |
|---|---|---|
| Termination with proper notice | Lawful | Notice pay (or worked notice) + gratuity + leave + pending salary |
| Termination without notice, no valid Article 44 ground | Unlawful | The above, plus pay in lieu of the notice not given |
| Dismissal for an illegitimate reason, e.g. retaliation for a complaint | Arbitrary | The above, plus compensation of up to 3 months' wages |
The distinction matters because the remedies stack. Arbitrary dismissal compensation does not replace your gratuity or notice pay — it is additional.
There is a narrow list of grounds — set out in Article 44 of Federal Decree-Law 33/2021 — on which an employer may dismiss immediately without notice. These include matters such as assuming a false identity, causing substantial deliberate loss to the employer, serious breach of safety instructions, disclosing work secrets, continued failure to perform basic duties after a written investigation and two warnings, and being absent without valid reason for defined periods. (A final custodial sentence of three months or more ends the contract separately, under Article 42.)
Two points are widely misunderstood:
Two honest caveats. First, the compensation ceiling is three months' wages — meaningful, but not a windfall, and the court determines the amount based on the circumstances rather than awarding the maximum by default. Second, the burden is on the employee to show the dismissal was for an illegitimate reason, which is much easier when there is a documentary trail and very difficult when the whole exchange was verbal.
This is the practical argument for putting concerns in writing while you are still employed. An email trail created before a dismissal is worth far more than a recollection afterwards.
Dismissal for an illegitimate reason rather than one connected to the work — most clearly, dismissing an employee because they filed a serious complaint with MOHRE or brought a legitimate legal claim against the employer.
Up to three months' wages, determined by the labour court based on the circumstances. It is paid in addition to your gratuity, notice pay and other final settlement entitlements, not instead of them.
Not for ordinary poor performance. Article 44(4) allows dismissal without notice only where you continue to breach your basic duties after a written investigation and two written warnings. Otherwise the employer must use the normal notice route.
Not automatically under the current law. The 2021 law changed the position considerably from the older regime. If an employer claims a dismissal cancels your accrued gratuity, ask them to identify the specific legal basis.
Involuntary dismissal is precisely what ILOE covers, so you may be able to claim. Dismissal for disciplinary reasons is excluded, as is resignation.
Unlawful usually refers to termination without the required notice or without a valid summary-dismissal ground, remedied by pay in lieu of notice. Arbitrary refers to the reason being illegitimate, which attracts the additional compensation of up to three months' wages.
Source: Federal Decree-Law No. 33 of 2021 and its amendments (official MOHRE English translation, PDF). The Arabic text prevails.