How much do we need to pay redundant employees?
The reader's company plans to terminate a number of staff members in a cost-cutting exercise
My company is Dubai based and all the employees are provided with a Dubai visa. As a cost-cutting exercise the company has identified some positions as redundant and we plan to terminate the employment of a number of employees. These employees are on unlimited contracts and have a notice period of 30 days as per the labour contract. Can you confirm what we need to pay them? Do they get 30 days pay or do we have to pay them for three months? What about the gratuity and the balance of their leave? Is this part of the payment or an extra? What do we pay? Your advice is appreciated. AR, Dubai
If a number of employees are being terminated because of economic challenges, this is a legitimate reason for redundancy and the employer is only obliged to provide notice and salary for a period of 30 days as per UAE Labour Law, or longer if their contracts of employment state a longer notice period. This will not be classed as arbitrary dismissal so no additional salary will be payable. As the employees are on unlimited contacts there are no penalties for breaking contract terms.
When someone leaves service, having worked for a period of at least one full year, they are entitled to an end of service gratuity. Article 132 of the law states: "The worker having spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service. The days of absence from work without pay shall not be included in the calculation of the period of service, and the gratuity shall be calculated as follows: one, the wage of twenty one days for each of the first five years of service. Two, the wage of thirty days for every additional year. Always provided that the total gratuity does not exceed the wage of two years." Article 133 also applies and this states: "The worker shall be entitled to a gratuity for the served fraction of a year, provided that he completes one year of continuous service.’ End of Service Gratuity is calculated on the basic salary.
If an employee has accrued days of annual leave that have not been taken, and will not be used during the notice period, then payment must also be made for these days in lieu. All monies owing should be paid at the time of the final salary payment.
One final point is that following changes to legislation by the Dubai Health Authority, a company must continue to provide medical insurance for 30 days after the end of the date of employment. In an update to general circular 09 of 2016 it was announced that: "Deletion date will be posted at 30 days from the last day of work, unless the end of the policy falls before then, then cover will cease when the policy year ends." So unless the scheme renewal date is within 30 days of the final date of service, the employee must continue to be provided with insurance for a further 30 days.
Read more from Keren Bobker:
I have noisy neighbours who have loud parties on a regular basis, so do I have any rights when it comes to making a complaint. When I have tried to speak to them, they say they can do what they like and there is no law about stopping them. This isn’t just on the odd occasion but is every single weekend and goes on until the early hours with loud music and people shouting. They just ignore me and the building security guard. Is there anything I can do as I cannot move for another six months and it is very frustrating? AM, Dubai
The noisy neighbours are incorrect - people cannot simply behave as they like in a civilised society without regard for others. Noise issues are regulated by Dubai Municipality and covered in Environment Protection Order no 61 of 1991. Chapter seven of this legislation is in respect of noise control regulations. The legislation states that: "It shall be the duty of the occupier of any premises … to adopt the best practicable means of ensuring that the emission of noise from those premises does not exceed a reasonable level. The level is considered reasonable if it does not exceed 55 decibels during the period 7am to 8pm and 45 decibels during the period 8pm to 7am." Holidays and popular celebrations are generally exempted, within reason.
If a neighbour is a persistent offender and does not respond to a personal request for consideration a complaint can be made to the Noise Control Officer at Dubai Municipality and official action can be taken if the neighbour refuses to comply. If, however, there is excessive noise outside of working hours, where residents are being significantly disturbed during the night, Dubai Police can be called and will put a stop it. Follow up should still be to the Municipality.
Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at email@example.com. Follow her on Twitter at @FinancialUAE.
The advice provided in our columns does not constitute legal advice and is provided for information only.
Updated: April 14, 2018 03:33 PM