Before going into detail, it is important to understand the difference between redundancy, termination and arbitrary dismissal.
This occurs when an employee’s position becomes ‘redundant’. That means the position no longer exists in the organization. Redundancy may occur because of the closure of an entire department in an organization, the position being replaced by technology or when the company decides to go lean to bolster profits and/or gain a competitive edge.
Termination occurs when an employee is ‘let go’ in favour of a more competitive candidate. Reasons for termination could include failure to meet job expectations, insubordination, attendance issues etc.
When an employee is terminated without a valid reason, it is known as an arbitrary dismissal. Labour lawyers in the UAE can assist in getting redressal for those dismissed in this manner.
Wrongful Termination in UAE: Compensation for Employees Under Arbitrary Dismissal
Wage Protection System
To ensure all salaries owed to employees are being paid, companies in the UAE must do so through the Wage Protection System, the WPS. The WPS was established in 2009 so employers match salaries paid to staff to the offer letter that bear both signatures. It acts as a deterrent against any wrong doing on the part of the company.
MoHRE recommendations in a Post-COVID Marketplace
In the present climate with an alarmingly high unemployment rate, the Ministry of Human Resources and Emiratization in the UAE has stepped in and passed a humanitarian resolution. It states that, for expatriate employees, companies are encouraged to engage in cost-cutting measures without making the employee redundant or terminating him. These measures, in the order of preference given by the Ministry, include remote working, paid and unpaid leave, temporary and finally permanent reduction of an employee’s salary. Many of these measures must be taken mutually with the employee.
The Ministry of Human Resources and Emiratization also introduced ‘sharing of employees. Instead of making a non-Emirati employee redundant, a company can register him on the government’s ‘Virtual Labour Market System’. The company can then loan the employee to other employers who then pay a salary to the employee. The original employer remains responsible for the employee’s visa, medical insurance and other basic allowances.
Rights of Employee Made Redundantly
The Labour Law in the UAE regulates public and private sector employer-employee relationships. It also outlines the process and entitlements due to the employee when he/she is ‘let go’.
Gratuity / End-of-Service Benefits
This law states that any person who has been employed for more than a year is entitled to gratuity, also known as end-of-service benefits. Gratuity is calculated at a different rate for the first 5 years of employment than from the sixth year onwards. Also, the final end-of-service benefits cannot exceed the sum total of two years’ worth of salaries.
The employer must also provide benefits such as housing allowance, medical insurance and transport allowance to the employee that was made redundant. This must continue until the ex-employee either leave the country or finds employment elsewhere.
The employee can seek advice from labour lawyers in Dubai when this occurs. He has the option of first approaching the Ministry of Human Resources and Emiratization with a complaint. Ministry officials act as arbitrators to solve the issue. When this is not possible, they refer the case to the Courts. If unlawful arbitrary dismissal is proven, the employer must compensate the employee the equivalent of his annual quarterly salary.
When the Employee is Abroad
When the employee is in another country at the time of redundancy, the employer may transfer his end-of-service benefits to the employee’s registered bank account in the UAE.
If returning to the UAE is not an option and / or the employee simply wishes to access the funds in his bank account, he can write to his bank and request funds to be remitted to another country. Alternately, he can ask the employer to deposit his payment in an exchange house that is registered with the WPS. The employee can then withdraw the funds in another country.
Leaving your UAE Bank Account Inactive
It is important to know that according to UAE Law, bank accounts are classified as dormant if they are inactive for seven years. Although there are means of reclaiming funds after the bank has declared your account as dormant, it is a long and slow process. Bottom line. Get your funds out as soon as it is possible for you to do so.
Labour Lawyers in UAE
When in doubt about how to go about wrapping up your life in the UAE while out of the country, labour lawyers in the UAE can provide much the legal know-how and assistance during these difficult times.