Can Force Majeure Be Invoked in Employment Contracts?
Ongoing regional and geopolitical tensions have prompted a critical question for businesses operating in the UAE: can employers rely on force majeure to terminate employment contracts? While the commercial impact of such events is undeniable, the legal position under UAE law is considerably more intricate.
From a regulatory perspective, employment relationships in the UAE are governed by the UAE Labour Law (Federal Decree-Law No. 33 of 2021) (as amended), which provides a structured and mandatory framework for termination and is further regulated and administered by the Ministry of Human Resources and Emiratisation (MOHRE), which oversees employer–employee relations, ensures procedural compliance, and implements applicable labour regulations. This raises the immediate question of whether general contractual principles such as force majeure can override employment law provisions. The answer is largely no.
Although the UAE Civil Transactions Law (Federal Law No. 5 of 1985 – UAE Civil Code) recognises force majeure under Article 273, its application in employment matters is limited, as labour law provisions take precedence.
What does the labour law provide in relation to termination?
The law sets out clear mechanisms. Under Article 42, employment contracts may be terminated on recognised grounds such as expiry, mutual agreement, closure of the business, death or permanent disability of the employee, bankruptcy or insolvency of the employer, or a decision by a competent authority confirming the employer’s inability to continue operations due to exceptional economic circumstances beyond its control.
Article 43 permits termination with notice for a legitimate reason and remains the most commonly utilised legal basis in practice. Articles 44 and 45 set out limited circumstances in which termination without notice is permitted. Article 44 allows the employer to terminate the contract without notice for serious misconduct, while Article 45 permits the employee to terminate the employment contract in cases of employer breach. Importantly, Article 47 protects employees against unlawful termination, exposing employers to compensation of up to three months’ salary where termination is unjustified.
In light of the above, can regional conflict qualify as force majeure?
Legally, force majeure requires an unforeseeable external event that renders performance impossible, not merely difficult or commercially burdensome (Article 273 of the UAE Civil Code). This distinction is critical. While geopolitical tensions may disrupt supply chains, increase costs, or affect operations, such circumstances are generally treated as economic hardship rather than legal impossibility.
UAE court decisions provide useful guidance on this issue. In Dubai Labour Case No. 5241/2020 and Case No. 14388/2020, the courts recognised the COVID-19 pandemic and related government measures as force majeure where businesses were unable to operate or experienced severe economic contraction. In such circumstances, termination was upheld as justified and not arbitrary, provided there was clear evidence of impact.
However, in Case No. 5333/2020, the court held that termination was arbitrary where the employer failed to comply with mandatory procedures, particularly the requirement to explore alternatives to mitigate losses in accordance with applicable ministerial resolutions.
These decisions highlight a critical principle: force majeure is not automatically accepted; it must be substantiated and procedurally compliant.
So, when can force majeure be invoked in employment contracts?
Only in exceptional cases, such as where operations are rendered impossible due to government orders, legal prohibitions, or complete business shutdown, may the threshold be satisfied. Even in such cases, employers must still comply with labour law requirements and follow the procedures of MOHRE, including notice obligations where applicable and providing proper documentation.
A key risk arises where force majeure is incorrectly invoked. Employers may face claims for unlawful dismissal under Article 47, financial liability, and reputational consequences. UAE courts consistently adopt a balanced approach, weighing employer hardship against employee protection and requiring clear and convincing evidence before accepting force majeure arguments.
What, then, should employers do in practice?
Rather than relying solely on force majeure, employers should consider legally recognised alternatives, including:
termination with notice under Article 43, where appropriate; mutual separation arrangements; and restructuring measures (e.g. leave or temporary salary adjustments with employee consent).
These options are more closely aligned with the statutory framework and significantly reduce legal exposure.
Practical Takeaway
Regional or geopolitical conflict does not automatically justify termination of employment contracts under force majeure in the UAE. Employers must demonstrate true impossibility, not merely difficulty, and ensure strict compliance with labour law requirements. Force majeure must be supported by evidence such as business closure, government orders, or material economic contraction, and must be accompanied by proper procedural steps.
Conclusion
While force majeure remains a recognised legal doctrine, its application in employment relationships is exceptional and narrowly construed. Employers should adopt a balanced, compliant, and well-documented approach, ensuring adherence to the requirements of MOHRE, and carefully navigating between business realities and statutory obligations to mitigate risk and ensure enforceability.
Our team regularly advises on force majeure, restructuring strategies, and termination frameworks to mitigate exposure and ensure legally robust and compliant outcomes please contact Suneer Kumar at suneer@alsuwaidi.ae, Vida Grace Serrano at vida@alsuwaidi.ae or Mamdouh Tawfik at m.tawfik@alsuwaidi.ae