Gulf Law at Gulf News 3 January 2017
Payout can range between one month to three months' worth of gross salary
Dubai: Dennis, an expatriate based in Dubai, has just been informed that his services are no longer needed by his company.The news came as a shock, especially since he had been with the same employer for 16 years. At the same time, he's overwhelmed with stress - and fears what the future holds for him and his family.
"It's painful and scary at the same time because it's difficult to find another job these days," he said. But there's nothing the father of two could do. His company is going through a difficult period and can no longer pay for his salary without incurring losses.
Redundancies are part of business reality. During a downturn, many employers face the tough economic decision to let go of some of their staff. In some cases, the termination is with immediate effect and without prior notice, leaving jobless workers suddenly without money to pay for bills and housing rent.
According to one legal counsel, there has recently been a rise in the number of expatriates seeking assistance after their services have been terminated without due notice. “This month alone, we have more than 30 cases,” said one lawyer based in Dubai.
As businesses attempt to find ways to survive amid a low oil price environment, a number of companies in the UAE, including banks, have imposed some job cuts. Just recently, Etihad confirmed that it is laying off some staff.
But while companies have the right to downsize, employees, too, have the right to be compensated in order for them to have a smooth transition. The labour law specifies that those who have been dismissed outright due to economic reasons are entitled to receive an extra payout on top of the gratuity.
The amount of indemnity, also known as “compensation in lieu of notice,” will depend on the terms of the employment contract, which can either be 30 days or 90 days’ worth of total salary, including allowances.
Terminated employees are, therefore, advised to check the provisions or terms in their contract, particularly the section that talks about notice period for termination because this will be used as basis for calculating the indemnity in cases where the employee gets fired out of the blue. In most instances, employment contracts in UAE mandate a 30-day termination notice, but employees holding sensitive roles have more than 30 days.
“[The compensation] is incurred by [the employer] as a result of failure to give notice [to the employee],” said Barney Almazar, Gulf Law director. Aside from the termination and gratuity pay, the employee is also entitled to receive a return ticket to home country.
“[If the employee is terminated with immediate effect, he or she] will get compensation in lieu of notice [which can be] 30 days or more, depending on the term of unlimited contract based on total salary, including allowances, or up to 90 days total salary with allowances for a limited contract,” Almazar told Gulf News.
“In both cases, gratuity or end-of-service [compensation] will be paid and computed per year of service based on basic pay, no allowances.”
Almazar, however, clarified that even if it is especially difficult on the part of an employee, immediate termination of employment can’t be considered arbitrary if the employer is indeed going through financial difficulties - unless proven otherwise.
“Economic loss is a justified cause to terminate employees. It becomes arbitrary if there are no losses or if the company immediately hires a replacement for the terminated employee.”