My employer is making a number of redundancies and closing its UAE office due to economic reasons. We have been paid up until now although I understand transfer options were to be given to some staff but not everyone was contacted about this. I didn't hear anything even though there are positions available in different countries. The employees who have not been offered another role have been contacted and are to be dismissed with a final settlement this week. At this point, should the company still abide by the three months' additional salary due to unfair termination? If not, do I still have a case to claim this considering the company is no longer officially operating in the UAE and their trade licence is shortly to expire? If they offer me a resignation letter to sign, can I reject this and insist they make me redundant? Also, is it mandatory for companies to pay the end of service gratuity to the employee's bank? Or can they hand it directly to the employee to avoid the bank freezing it irrespective of the bank letter that was drafted by the company stating 'in the event of resignation/termination, bank will be informed and staff's EOS will be paid to the bank account'? AD, Dubai
If a company is closing down, or making people redundant for economic reasons, that is valid and does not come under the heading of unfair or arbitrary dismissal per Article 122 of UAE Labour Law. It appears that in this case the employer has given employees the relevant notice of termination per their contracts of employment and paid them accordingly. The employer is under no obligation to provide alternative employment, particularly it if would require relocation to another country.
In this case I would be surprised if the employer proffered a resignation letter and if they do, I would suggest rejecting it and going down the route of redundancy to ensure that no benefits are curtailed.
When an end of service gratuity is paid to an individual this should be paid at the same time as their final salary payment and this should be to their bank account in accordance with the guidelines of the Wages Protection System and marked as ‘final salary’ as per UAE guidelines. Although I have heard of cases where an employer has been willing to pay the gratuity to a different account, or as a cash payment, these are exceptions to the rules and most employers will follow government guidance. Where an employer has stated in writing how such a benefit will be paid, there is no reason to expect them to do otherwise.
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My colleague died recently and we are trying to work out what payment his family is entitled to. The company is quite small so management has not dealt with this issue before and also do not know what they need to do. What happens to the end of service payment? Is that lost on death or does it need to be paid, and if so, to whom? GR, Abu Dhabi
Should an employee die, any end of service gratuity that has accrued is payable as if the person had been made redundant, without reduction. These monies are payable to the individual’s beneficiaries and this is stated in Article 136 of UAE Labour Law, ‘in the event of the worker's death, his end of service gratuity shall be paid to the beneficiaries thereof’. This is also covered in Federal Law no 7 for Pension and Social Security. Article 42 of this states, ‘in the case of death of an insured person, the remuneration payable to him against the period of service shall be paid to his beneficiaries…’. It goes on to say, ‘in the case of non-existence of such beneficiaries, the remuneration shall be distributed in accordance with the rules of succession in Islamic Sharia.’ This is essentially saying that the gratuity can be paid to the deceased employee’s preferred beneficiaries but if no instruction exists, or if this is unclear, the inheritance provisions of Sharia law should be applied. Any outstanding salary payment should also be paid out in the same way.
To avoid any confusion in the event of the death of an employee, all employers should keep a record of their employee’s next of kin and also who is the preferred beneficiary in respect of any monetary payment.
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How many days can I stay in Dubai after the cancellation of my employment visa? PS, Dubai
Once the visa has been officially cancelled a person has a 30-day grace period and must exit the UAE before this expires to avoid fines for illegally overstaying.
Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 20 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.
