The Employer’s Duty to Investigate Employee Misconduct in the UAE Labour Law: Focus on Financial Crimes
Employer and employee relations in the UAE are governed primarily by Federal Decree-Law No. (33) of 2021 Concerning the Regulating Labour Relations and its Executive Regulation issued under Cabinet Resolution No. (1) of 2022. When an employee commits a serious violation, particularly financial crimes such as theft or breach of trust, the law prescribes specific obligations on the employer before termination or referral to the police.
Legal Basis for the Employer’s Duty to Investigate
Article (44) of the Labour Law clearly provides that an employer may dismiss a worker without notice only after conducting a written investigation with him. The dismissal decision must also be in writing, reasoned, and delivered to the employee. This provision ensures that disciplinary measures are taken in accordance with principles of fairness and accountability.
The Abu Dhabi Court of Cassation, in Judgment No. 12 of 2024, reaffirmed this requirement, stressing that an employer may not lawfully dismiss an employee without first holding a documented investigation and providing reasons.
When Must the Investigation Take Place?
• Before dismissal or disciplinary sanction:
Under Articles (44) and (39) of the Labour Law, employers are required to conduct a written investigation prior to enforcing dismissal or applying disciplinary measures.
• Before reporting to police?
The law does not prevent an employer from immediately reporting crimes such as theft, fraud, or breach of trust to the competent authorities. However, if the employer also intends to discipline or dismiss the employee, the internal investigation remains a mandatory step.
• Suspension pending investigation:
Article (40) of the Labour Law allows an employer to temporarily suspend an employee for up to 30 days with half pay while conducting a disciplinary investigation. Where the accusation relates to criminal offences such as theft or breach of trust, suspension may continue until the criminal case is resolved, with wages suspended during this period.
What Constitutes a Proper Employer Investigation?
Article (24) of The Executive Regulations of the Labour Law, lay down the formal requirements:
• The employee must be notified in writing of the charges.
• The employee must be given the opportunity to provide statements and defense.
• The investigation and statements must be documented in a report filed in the employee’s personal record.
• The penalty and its reasons must be communicated to the employee in writing.
• Investigations must be timely: the violation must be addressed within 30 days of discovery, and penalties imposed within 60 days from completion of the investigation.
Thus, a valid investigation requires documentation, opportunity to defend, proportionality of penalty, and adherence to prescribed timelines. An informal conversation or assumption of guilt does not satisfy the legal requirement.
Consequences of Complying with Investigation Requirements
• Lawful dismissal: The employer can terminate the employee’s contract of employment under Article (44) of the Labour Law without exposure to claims of arbitrary dismissal.
• Enforceability: The dismissal can be defended successfully in labour court proceedings.
• Protection of employer’s rights: Employers can report the crime to authorities without undermining their ability to discipline internally.
• Transparency and fairness: Protects the employer from reputational or legal challenges for unfair treatment.
Consequences of Failing to Comply
• Dismissal considered arbitrary: Failure to conduct or document a written investigation may render the termination unlawful. The employee may claim compensation for arbitrary dismissal under Article (47) of the Labour Law.
• Invalid disciplinary penalties: Any penalty imposed without following Article (24) of the Labour Law procedures can be overturned.
• Financial liability: The employer is required to pay compensation in lieu of notice because he didn’t comply with the legal requirements of the termination without notice, with up to three months salary (depending on the conditions stipulated in the employment contract).
• Criminal proceedings unaffected: Reporting the employee to the police remains valid, but the employer risks labour disputes for mishandling the internal disciplinary process.
Conclusion
Under UAE labour law, employers have both a legal obligation and a strategic interest in conducting a fair, documented, and timely investigation before disciplining or dismissing an employee accused of misconduct, especially in financial crimes. While notifying the police is independent of this obligation, employers must maintain and follow the requirements and procedures of an internal investigation as set out in Articles (44), (39), and (40) of the Labour Law, together with Article (24) of the Executive Regulations, before terminating an employee without notice. Complying with these procedures ensures that the employer’s actions are enforceable, defendable, and legally sound, and prevents additional financial liabilities toward the employee, such as compensation in lieu of notice or other claims for unlawful termination.
Copyright: Dr. Mohammed Hassan Al Raeesi Advocates & Legal Consultants retains all intellectual property rights to this content. No third party may use, copy, or modify any part of it without prior permission and without proper attribution to our firm.
Disclaimer: This is a conceptual framework intended for thought leadership and does not constitute legal or financial advice. For professional evaluation of your company’s financial and ESG governance policies, please contact our firm.
📍 1105, Tameem House, Al Barsha Heights, Dubai, UAE
📞 +971 4 298 0686
💬 WhatsApp: +971 56 111 3928
📩 info@dralraeesilegal.com
🌐 www.dralraeesilegal.com