UAE labor law
Case Study/problem:
I work on a limited period contract in Abu Dhabi. My contract expires in September through I am currently undergoing training, which costs the company an approximate of Dh 7000. The company policy states that if I resign within two years after training, I will be required to compensate the employer for the training. I plan to resign a few months after my contract is renewed. Is the policy legal? Does this policy depend on the period of the new contract being limited or unlimited? Anonymous
The above individual is facing the problem whereby if they resign from their current employment, the employer has the right to deduct training costs that they incurred. The case study is based on the employee terminating employment and the compensation that he may need to make to the employer due to the resignation.
According to UAE labor law (Federal Law No. 8 of 1980)
Article 47: an employer may include in the training contract that upon completion of the training, the trainee shall work for the establishment where he has been trained for a period not more than double the training period. The employer may also employ the trainee at the end of the training period.
Article 113: The employment contract can be terminated in case of the following:
- Mutual consent by both parties to terminate the contract and the employee makes his consent in writing
- The expiry of the period specified in the contract; unless an extension of the contract is made per the law.
- At the option of either party in unlimited contracts, provide that warnings and acceptable causes for termination of contracts with no presence of abuse are complied with.
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Article 116: If an employee terminates the contract for other reasons than those specified on Article 121, the employee shall compensate the employer for losses incurred as a consequence of the termination of the contract. The compensation amount shall not be more than half a month’s salary paid for three months or for the remaining period of the contract, whichever is shorter. Terms of the contract may provide otherwise.
Article 117: Either an employer or employee can terminate the unlimited period contract for a valid reason at any time by written notice duly provided to the other party at least thirty days prior to termination. For daily-pay employees, a notice shall be given as follows:
- One week if employee has worked for more than six months but less than one year
- Two weeks for an employee who has worked for at least one year.
- One month for an employee who has worked for five years
Article 119: if either party fails to give notice or reduces the notice period, they will be obliged to pay the other party indemnity known as compensation in lieu of notice. This compensation should be equal to the employee’s pay for the entire notice period or proportionate to the reduced period. For employees on daily, weekly, or hourly, the compensation shall be computed based on the last pay they earned.
Article 121: An employee may terminate a contract without notice if:
The employer fails to fulfill the obligations to the employee stipulated in the employment contract or the labor law.
The employer commits an act of assault against the employee.
Article 127: if the work performed by an employee grants him access to the employer’s clients or any work secrets, then the employer can oblige the employee not to compete or work with competitors after the termination of the contract. This agreement shall be considered valid if the employee is twenty-one years of age and above and also depending on the place, time, and nature of work as deemed necessary to protect the interest of the business legally.
Article 129: A non-national employee who, after notifying the employer of their intention to terminate the contract, absents themselves from work before the notice period is over may not take up employment elsewhere. They may not work anywhere before the lapse of a year from the date they were absent from work. This is despite getting consent from the employer. No employer who has information on the case is allowed to recruit them or keep him in service before the year lapses.
Resolving the Case
As part of best practices for employers, training of employees is crucial for an organization. However, the law also seeks to protect employers when employees after they have been trained leave employment. Article 116 explains that an employee who leaves employment or terminates a contract for other reasons other than being assaulted by an employer or an employer fails to fulfill their obligations to them, and then they should compensate the employer. In this particular case, it is clear that the employee is seeking to gain knowledge from the training then find employment afterward and elsewhere. As per the law, the employee shall be required to compensate the employer.
The employer, in this case, may seek compensation on the losses incurred by the termination. When the employee resigns, the employer will incur losses in terms of training costs and the training they will incur for the recruit. This article stipulates that the employer may seek compensation, but the period id limited to either the remaining period of the contract or three months, whichever is shorter. The individual should, therefore, be ready to incur this expense.
The employee should also note several things when resigning. In case the employer assaults the employee, article 121 allows for the employee to resign and will not be required to make compensations. If this is not the case, however, the employee shall be required to give a notice period depending on the contract as stipulated in article 117. This notice period is usually vital in cases where there is a need for handing over and winding up of unfinished works. Since the anonymous individual is concerned about the training, they should also note that the law allows employers to forbid employees from working with competitors after employment. This is stipulated in article 127, which also is set up to protect employers and business interests, especially where an employee has access to clients and business secrets.
In case the employee is a non-national, they should ensure that they serve the notice period in its entirety as they may be forbidden from working in any organization for a year, as stipulated in article 129. The employee has more to consider apart from just the training costs if they plan to resign months after having their contract renewed. This shows the importance of reading the contracts thoroughly and also knowing the labor laws in the country where you work.