"We are restructuring." If you have heard those words this year, you are in large company — and what happens next is governed by Federal Decree-Law No. 33 of 2021, not by your manager's mood. Here is what a cost-cutting dismissal must include, and when it crosses into arbitrary termination worth compensation.
What every dismissal owes you
- Notice. Your contractual notice period applies: minimum 30 days, maximum 90 (Article 43). Payment in lieu is allowed.
- Gratuity. End-of-service pay is unaffected by the reason for termination — calculate yours with our gratuity guide.
- Final settlement. Unused leave, unpaid salary and any contractual benefits.
Redundancy itself is not illegal — employers may terminate with proper notice. The question is whether yours qualifies for additional compensation.
When dismissal becomes "arbitrary"
Under Article 47, termination is arbitrary when it happens because you filed a serious complaint to the Ministry or a court action proven valid — retaliation, in plain terms. Courts have also treated some cost-cutting dismissals as arbitrary where the stated reason does not hold up.
If a court agrees, it awards fair compensation of up to three months' salary, based on your last pay and weighed against your role, length of service and the harm done. This comes on top of notice pay and gratuity, not instead of them.
One genuine exception: an employer in severe financial crisis that has court or authority approval to wind down operations can terminate without triggering arbitrary-dismissal protections (Article 25(1)(b)). A profitable company "optimising costs" is not that.
How to pursue it
- File a complaint with MOHRE, which attempts an amicable settlement first
- If settlement fails, take the case to court in your emirate
- Bring evidence — contract, termination letter, salary certificates, and performance appraisals if the dismissal was dressed up as performance-based
Do it promptly, and sort the practical side in parallel: if you paid into ILOE unemployment insurance, claim it — our ILOE guide explains how — and check your visa grace period so the job hunt has a clock you can see.
Key takeaway
Redundancy with proper notice is legal, but you always keep notice pay, gratuity and final settlement — and arbitrary dismissal adds up to three months' salary in court-awarded compensation. Start at MOHRE, escalate to court if settlement fails, and claim ILOE while you search.
FAQ
Is being dismissed for cost-cutting automatically arbitrary termination?
No, but it can qualify — particularly where the stated reason does not withstand scrutiny or the dismissal followed a complaint you made. Courts decide case by case.
How much compensation can I get for arbitrary dismissal?
Up to three months' salary based on your last pay, set by the court considering your work type, service length and the harm caused — in addition to notice and gratuity.
Does redundancy reduce my gratuity?
No. End-of-service gratuity is owed in full regardless of why the employment ended, provided you completed at least a year of service.
Where do I complain first?
MOHRE. The Ministry attempts an amicable settlement; if that fails, you file in court in the relevant emirate.
