The stigma of being made redundant is long gone, says Keren Bobker, who advocates negotiating an exit package
I have to resign from my Abu Dhabi job, so is it better to take redundancy or be terminated?
The company my husband works for wants to get rid of quite a few team members and is asking staff in the Abu Dhabi office to resign. Is it better to resign or be terminated? T H, Abu Dhabi
An employee being let go, terminated or made redundant is essentially the same thing and means that they are not leaving by their own choice. Resignation means that the employee is choosing to leave. The difference in the two ways can mean that the employee receives entirely different severance pay and end-of-service benefits. The stigma of being made redundant has long gone and in a volatile world many people will experience redundancy at some point. It is better in most cases from a purely monetary point of view to be made redundant.
If someone resigns from a company, and has been employed for fewer than five years, their end-of-service gratuity will be reduced. If someone is on a fixed-term contract, resignation can mean they have to pay a penalty for breaking a contract whereas, if they are made redundant and the employer breaks the contract terms, they will receive compensation. Note also, that a ban is only applicable when someone leaves employment of their own volition. If someone plans on leaving the UAE, the employer may not be liable to pay for a flight to a home country if the person resigns. From the point of view of job applications, it is generally better if a CV uses the phrase “redundancy” rather than termination, as most people will assume this is for economic reasons, rather than being let go for unsatisfactory work performance.
I have been with my company for a few years and we were recently taken over. We have new management and they have told all staff that there will have to be changes from September 1. Our salaries are all being cut and we have also been asked to work another hour a day. I understand that times are tough for some businesses, but I would like to know if it is legal for them to make changes like this without the agreement of the staff. T G, Dubai
When a company takes over an existing business in this way, as an ongoing entity with all the employees, it comes with certain legal responsibilities. It is stated in UAE Labour Law, Article 126, “Should a change occur in the form of the establishment or the legal headquarters thereof, the employment contracts valid at the time of the change shall remain valid between the new employer and the workers of the establishment. The employment shall continue and the original and new employer shall be jointly liable for a period of six months for the execution of the obligations arising from the employment contracts during the period preceding the change . Upon the lapse of the said period, the new employer shall solely bear such liability.” Furthermore, no matter the situation, employers are not permitted to arbitrarily change contract terms without the employee’s agreement at any time. In this situation, the new owner of the company must honour the existing contract terms for six months from the date of taking over the company before any changes are made.
I am working as a general electrical engineer and my visa was issued in January 2016. I have received an offer from a company in another GCC country and have submitted my resignation letter to the employer with a notice period of 30 days. My employer rejected my resignation. What can I do in this situation? Can I move and start working for my new firm even if they don’t cancel my residency here? If they don’t cancel my residency, do I face problems securing a residency visa in my new country? R M, Abu Dhabi
If an employee submits formal resignation, the employer is obliged to accept it and must cancel the employment visa once the notice period has expired. They cannot refuse to accept a resignation or insist that someone continues working for them. It is the employer’s responsibility to arrange for the cancellation of the work permit and residency visa, and if they refuse to do so, the employee can file a complaint against them at the Ministry of Human Resources and Emiratisation (MoHRE). It is important that a visa is properly cancelled before leaving the country to prevent any problems if someone wishes to re-enter the UAE, but this should not cause a problem with obtaining a new visa. Far better, however, to ensure that visas are cancelled and marked as such in a passport to avoid queries and complications. I would suggest contacting MoHRE as soon as possible so that the issue can be properly resolved in full.
Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 20 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.