In the first section of this article, we will address the cases of compensation for unfair dismissal in the Federal Labor Law, explaining the situations in which a worker is entitled to compensation for the unlawful termination of the employment contract. In the second section, we will discuss the worker’s right to claim delay interest as a form of compensation for the employer’s delay in paying labor dues. Can the worker request delay interest, will the court grant this request, and what are the limits of compensation?

First: Compensation for Unfair Dismissal in the Federal Labor Law

In the Federal Labor Law of the United Arab Emirates, unfair dismissal is considered the termination of an employee’s service without a valid reason or without following the due legal procedures. In such cases, the employee is entitled to compensation for the damages suffered as a result of the unfair dismissal.

What are the cases in which a worker is entitled to compensation for the unlawful termination of the employment contract?

The legislator in the new Labor Relations Regulation Law has limited the cases in which a worker is entitled to fair compensation (“unfair dismissal compensation”) to two specific situations. The Abu Dhabi Court of Cassation confirmed in its ruling issued on August 28, 2024, in appeal No. 41 of 2024, that the cases of unfair dismissal are limited to the two situations mentioned in Article (47) of the Labor Law.

The termination of a worker’s service by the employer is considered unlawful if the termination is due to the worker filing a serious complaint with the ministry or filing a lawsuit against the employer that has been proven valid. The legislator has limited the cases in which a worker is entitled to fair compensation (“unfair dismissal compensation”) for the unlawful termination of the employment relationship to two situations:

1. The first case: The employer terminates the worker’s service after the worker has filed a serious complaint. This means that the termination of the worker’s service by the employer occurs after the worker has filed a labor complaint with the Ministry of Human Resources and Emiratisation. The court independently assesses the seriousness of the complaint, whether it has been settled or referred to the court.
2. The second case: The termination occurs after the worker has filed a lawsuit against the employer, regardless of its type, provided that its validity is procedurally proven without waiting for the final decision. The worker is entitled to compensation in both cases, even if the employer complies with the notice obligation.

What is the value of compensation for unfair dismissal?

Article 123(a) of the Labor Law states that “If a worker is unfairly dismissed, the court may order the employer to pay compensation to the worker. The court shall determine this compensation considering the type of work, the extent of the damage suffered by the worker, and the duration of service, provided that the compensation amount does not exceed three months’ wages calculated based on the last wage received by the worker.”

If you need legal advice on labor issues, you can benefit from the services of specialized lawyers at Al Dhaheri & Company. A labor lawyer can help you protect your rights, provide legal advice on labor laws, and represent you before courts or dispute resolution committees.

Second: The worker’s right to claim delay interest as a form of compensation for the employer’s delay in paying labor dues

Delay interest is the interest imposed on due amounts that have not been paid on time. This interest is used as compensation for the delay in payment and is usually calculated as a percentage of the due amount for each day of delay.

In labor cases, delay interest may be imposed on financial compensations that have not been paid on time, such as overdue salaries, compensation for unfair dismissal, or failure to provide a certificate of experience.

Can the worker request delay interest, and will the court grant this request? What are the limits of compensation?

The Abu Dhabi Court of Cassation has ruled in several judgments that a worker is entitled to delay interest due to the employer’s delay in paying the worker’s due and specified amounts. The most recent rulings were in appeal No. 41 of 2024 and appeal No. 71 of 2024 (labor appeal).

Delay interest is considered compensation recognized by law for the benefit of the creditor (worker) who did not receive their rights due to the debtor’s (employer’s) refusal to fulfill their legal or contractual obligations. The court ruled that delay interest awarded to the creditor upon request is compensation for the damage suffered due to the debtor’s delay in fulfilling their financial obligations, provided the debtor is solvent and the amount of the obligation is known at the time of the request. The court determines the compensation percentage based on the awarded amount, effective from the date of the legal claim unless otherwise specified by agreement or custom. This applies unless the law states otherwise.

The amount of delay interest is subject to the court’s discretion based on the circumstances of each case and does not exceed 15% of the awarded amount. If you face an issue related to delay interest, it is advisable to consult a specialized lawyer to obtain appropriate legal advice and ensure your rights are protected.