I have been working in a company in Dubai for two years on an unlimited contract. My manager has now asked me to tender my resignation citing poor performance and financial problems that the company is facing. The company has threatened to terminate my contract if I don’t resign. They even started the countdown of my notice period with a mail stating that it began on December 1 and that it covers three months as per the labour contract. Under the UAE Labour Law, does an employer not need to have legitimate reasons to terminate an employee’s service? Is forcing me to sign a letter of resignation legally acceptable? When does the notice period start? What are the disadvantages in case I submit my resignation?

As per the UAE Labour Law, no employee can be forced to resign. If the questioner submits his resignation, it will only make the employer’s case stronger in a legal dispute. In addition, the end-of-service gratuity will be less; in the case of the questioner, it will be calculated as one-third of his one month’s salary for every year served. As for the notice period, the labour law obliges all parties (worker and employer) to submit notice to each other if one wishes to terminate the unlimited labour contract; the period of notice as per the Labour Law shall be not less than one month, but both parties may agree to increase this period. The notice period shall be effective from the date of resignation or the termination of the labour contract by either party. Therefore, if the company fires the questioner, the questioner may claim his rights which are specified by the Labour Law and also has the right to ask the court concerned for a compensation for the arbitrary dismissal if he could prove that the company has fired him not as per the UAE Labour Law.


End-of-service benefits

I have worked in a company for more than three years with a good salary in addition to other entitlements. Two months ago, the employer sold the company. My problem started as the new employer asked me to move to another branch of the company to handle another position for Dh3,000 less than I’m receiving now. One of my colleagues told me that the new employer intended to fire me and that he was trying to force me to submit my resignation by reducing my salary. Therefore, I submitted my resignation and served the one-month notice period as per the Labour Law. Upon the expiry of the notice period, I demanded the employer to settle my end-of-service entitlements, but he rejected the same saying he was not obliged to pay for the period when I had been working with the previous employer. According to the new employer, he was obliged to pay my end-of-service dues only if he had terminated my service and only after I had worked for him for more than six months as per the UAE Labour Law. How could I obtain my entitlements? Who is responsible for my entitlements, the previous or new employer?

Article (126) of the UAE Labour Law states the following: “Where a change occurs in the form or legal status of the establishment, contracts of employment that are valid at the time of the change shall remain in force between the new employer and the workers of the establishment, and their service shall be deemed to be continuous. Both the original employer and the new employer shall be jointly liable for a period of six months for the discharge of any obligations resulting from contracts of employment during the period preceding the change; after the expiry of this period, the new employer shall solely bear the liability.”


Passport as security

A company-owner based in Dubai asks: My company activity is ‘Leasing and Hiring of Equipment’ such as electricity generator and fork lift. As a usual practice, when anyone wants to hire an equipment, the person has to provide us with a post-dated cheque for the value of the equipment as a security. There have been cases where some customers are not able to give us the security cheques. Instead, they are ready to put their passports as security. Is it legal to hold someone else’s passport as security against the equipment rented?

Holding a passport as guarantee is contrary to the UAE law as a passport is considered a document belonging solely to that person. It can only be held by a court.

— Questions are answered by advocate Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.