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Can UAE Employees Claim Compensation for Arbitrary Termination Due to Cost-Cutting?

Sun, Aug 2, 2026(2h ago)UAE

If you have been dismissed under the guise of "cost-cutting" despite having a strong performance record and six years of service, you may have grounds to challenge the decision. Under the UAE’s Federal Decree-Law No. 33 of 2021, an employer is permitted to end a contract by providing the notice period stipulated in your agreement. However, this does not grant them a free pass to terminate staff without a valid, justifiable reason. If the dismissal is deemed arbitrary—meaning it lacks a legitimate basis or stems from a personal grievance—the law provides a mechanism for employees to seek fair compensation, which can be up to three months of their last drawn salary.

To pursue a claim, you should first approach the Ministry of Human Resources and Emiratisation (MoHRE) to file a formal complaint. The authorities will initially attempt to mediate a settlement between you and your employer. If an agreement cannot be reached, you have the right to escalate the matter to the Dubai courts. While companies are permitted to reduce their workforce during genuine financial crises—provided they follow proper legal protocols like bankruptcy or insolvency proceedings—vague "cost-cutting" claims without evidence may not hold up as a valid reason. It is advisable to gather your exceptional performance appraisals as supporting documentation to show that your removal was not based on performance issues, and consider seeking formal legal counsel to navigate the specific requirements of your case.

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