Dubai’s Court of Cassation has established three new legal principles in favour of employees in a single judgment.
According to the first principle, the employer is obliged to pay the employee gratuity or provident fund, whichever is higher, at the end of his service.
The second principle is that if the employer makes changes in the contract against the interest of the employee, thus forcing him to resign, this would be considered as unfair dismissal for which the employee must be compensated.
The third principle is that it is not permissible for the employer to modify the terms of the employment contract on his own. Also, the employer cannot force the employee to do any work not mentioned in the employment contract.
These legal principles were issued when the court considered the lawsuit of a director against his company, asking the court to compel the company to pay him Dh710,000 as compensation.
He said that he was working as a director of a workshop on an annual salary of 25,000 pounds sterling in addition to an annual bonus of 10 per cent of the total annual salary. He said after four years, he was promoted to the position of general manager on an annual salary of £35,000 and an annual bonus of 75 per cent of the total salary.
He said he was surprised when, after 10 years, the company appointed another person in the position of director which he had occupied. He said he was forced to resign within five days after the appointment in order to preserve his dignity.
Then he asked the company to compensate him, including Dh112,000 for unfair dismissal, Dh37,000 for not giving him notice period, Dh17,000 as vacation allowance, Dh442,000 as end-of-service gratuity for five years and Dh101,000 as bonus for the last year of service.
But the company asked the employee to pay it Dh 107,000 for leaving service without the one-month notice period, Dh49,000 for dissolution of the employment contract before expiry of its term and Dh25,000 for damage caused to the company.
The Court of First Instance rejected the employee’s request and ordered him to pay Dh33,000 to the company.
Both the employee and the company appealed the ruling. The Court of Appeals asked the company to pay Dh607,000 to the employee and the annulled of the previous judgment in favour of the company.
The company appealed the ruling before the Court of Cassation which issued the above legal principles. The Court of Cassation issued a verdict rejecting the appeal of the company and in favour of the employee.
The Court of Cassation based its judgment on Articles 140 and 141 of the Labour Law. Article 121, which considers arbitrary dismissal of the employee, was also referred to. In this case, after employing a person as director for 10 years, the company had reduced his powers and degraded him in the eyes of the employees by reappointing him as consultant to the new director, the court said.