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Abu Dhabi, UAEThursday 13 December 2018

Employer needs clarification on redundancy protocol

In accordance with UAE Labour Law, financial issues in the company is an acceptable reason for someone to be made redundant

Employers need to be clear about what procedures are required when staff lay-offs become unavoidable. David Gray/Reuters
Employers need to be clear about what procedures are required when staff lay-offs become unavoidable. David Gray/Reuters

My company has recently made 20 employees redundant due to economic reasons as we are closing a department and will no longer be operating one area of business in this region. We have over 200 employees and are not in a free zone. All of our staff are on an unlimited contract. There are a number of points I need clarification on.

Do we have to pay contractual notice as some people are saying we have to pay three months if we make anyone redundant but this is a genuine reason to lay them off and all their contracts state one month’s notice? We are not asking people to work their notice so they actually stopped coming into work a few days ago and we will pay them their salary for the rest of the month. Do we still need to pay holiday pay and gratuity for the notice period or just for when they are working? How soon can we cancel their visas? Do we have to pay the repatriation ticket? Finally, if someone has had a joining allowance paid at outset, can we claim any of that back as part of the final settlement? This would be pro-rata.

LT, Abu Dhabi

In accordance with UAE Labour Law, financial issues in the company is an acceptable reason for someone to be made redundant, as the specific job role is no longer required, so in a case like this it would not be classified as arbitrary dismissal. This means that the notice period to be given by the company should be that stated in the official contract of employment, so one calendar month in this case. All benefits apply equally during the notice period and days of annual leave will continue to accrue, whether or not someone is actually working. The same applies to entitlement of the End of Service Gratuity, and this should be paid in full as this is redundancy, not resignation where it is reduced.

In respect of the cost of repatriation, Article 131 of Labour Law states, "the employer shall, upon the termination of the contract, bear the expenses of repatriation of the worker to the location from which he is hired, or to any other location agreed upon between the parties. Should the worker, upon the termination of the contract, be employed by another employer, the latter shall be liable for the repatriation expenses of the worker upon the end of his service." The company is therefore only liable for this cost if an employee is leaving the country and not taking up further employment in the UAE.

The employee’s visas should remain in force until the final day of the notice period. They can only be cancelled sooner with the agreement of both parties but this would usually only be agreed by an employee if they had another job to go to straight way.

The question of whether a joining allowance should be repaid depends on what was agreed in writing. This is the sort of issue that should always be formally clarified so as to avoid potential problems at a later date.

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I work part- time, three days a week, and have just been told by my employer that I am not entitled to any leave and this was apparently in a contract but I do not recall this. What is the Labour Law entitlement for part time workers? Do I still get the other benefits that the full-time staff get and the End of Service Gratuity?

JP, Dubai

This is not correct. All employees in the private sector are entitled to the standard benefits under UAE Labour Law with very few exceptions, and part-time employee are certainly covered by the law. There is no specific provision for part-time employment in UAE Labour Law so the standard rules apply. Article 75 states, "the worker shall be entitled during every year of service an annual leave of no less than the following periods: a - Two days for each month should the period of service of the worker be of six months at least and a year at most. b - Thirty days for each year should the period of service of the worker exceed one year. Should the service of the worker be terminated, the worker shall be entitled to an annual leave for the fractions of the last year."

Anyone who works part-time in this way, accrues days of annual leave in the same way as full-time employees do. In addition, employees are entitled to the standard benefits such as paid sick leave (after the probationary period), maternity leave, and the End of Service Gratuity on the same basis as a full-time employee, with benefits based on actual salary.

If the employer will not accept this, JP should register a case against them with the Ministry of Human Resources and Emiratisation. The helpline number is 800 665.

Keren Bobker is an independent financial adviser and Senior Partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE.

The advice provided in our columns does not constitute legal advice and is provided for information only.