Can a Financially Struggling Firm in the UAE Send an Employee on Leave Without Pay? Understanding Legal Obligations and Rights

During financial difficulties, employers must navigate the complexities of labor laws to manage expenses while respecting employee rights. In the United Arab Emirates (UAE), specific regulations govern how employers can address such situations, particularly regarding placing employees on leave without pay.

Employer Sanctions Under UAE Labor Law

Disciplinary Measures:

The UAE Labour Law outlines several disciplinary actions for employers when dealing with employee infractions or violations of company policies:

• Written Caution: A formal notice from the employer documenting a minor infraction.
• Written Warning: A more severe reprimand, also documented formally.
• Wage Deduction: Allowed for up to five days' wages per month as a penalty.
• Suspension from Work: An employee can be suspended without pay for up to 14 days.
• Deprivation of Periodic Raise: For up to one year in companies that offer this benefit.
• Promotion Deprivation: In establishments with a promotion system, this can last up to two years.
• Dismissal: Must include the preservation of the end-of-service gratuity for the employee.

Leave Without Pay: Employer and Employee Considerations

Legal Position:

Under UAE labor laws, employers are generally not permitted to unilaterally place employees on leave without pay. This action requires mutual agreement in writing from both parties involved, ensuring that the employee consents voluntarily to the terms of their unpaid leave.