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Does the employer have the right to dismiss the employee in cases of misconduct, and in the case of imposing a salary penalty, what is the maximum period allowed for the salary cut to be imposed?

UAE Federal Law No: 8 of 1980, provides clear provisions for employers to take disciplinary action on their employees. This is covered in detail in Chapter 6 of the UAE Labour Law from Article No: 112.

There are certain cases where an employer may fine or even dismiss an employee for misconduct and breach of duty, and it is important for all employees to understand the circumstances when these penalties can be imposed.

According to Article 102 of the UAE Labour Law, there are seven disciplinary rules that an employee should be aware of. However the Article 102 of the labour law states that disciplinary rules may be imposed by the employer or their representative in the following forms: disciplinary penalties which may be imposed by the employer or its agents upon its employees are as follows:

Seven ways your employer can discipline you

  • warning
  • fine
  • suspension from work
  • reduced pay for a period not exceeding 10 days while on suspension
  • forfeiture or deferment of periodic increment in establishments where such increments system is applied
  • 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.
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Is the UAE labour law applicable to general managers of LLC companies regarding salary, commission and end of service?

Labour cases are governed by Federal Law No.8 of 1980 Regulating Labour Relations. However, Article 1 of the mentioned law defines the employment contract as, “Any Agreement, whether for a limited or unlimited period, concluded between an employer and an employee under which the latter undertakes work in the service of the employer and under his management or control against a remuneration payable to him by the employer.”

Article 3 of the same law decided that the law should apply to all employees and workers in the UAE both nationals and expatriates.

Therefore, partners in a business are not considered ‘employees’ and are instead treated as ‘investors’ in their business.

However, if you hold an employee position additional to your status as a manager you will be considered an ‘employee’ working in the company.

Your dispute regarding unpaid salaries and end of service gratuity will be referred to the competent civil court if you are a partner in a business or the labour court if you have a labour contract.