+971 42 555496     info@hhslawyers.com
Compensation for employee arbitrary dismissal

Making Employee Roles Redundant Due to COVID-19

The novel coronavirus (COVID-19) has affected businesses across the globe and this has resulted in employers seriously considering measures in order to make sure there’s secure premise for employees while keeping business afloat even during a time of uncertainty. In this article, we’ll focus more on whether employee roles in UAE businesses may be made redundant due to the coronavirus outbreak. Let’s start! 

Employee redundancy in UAE

 As the coronavirus outbreak made it incredibly difficult for employers and companies to ensure they are making sound business decisions with minimal impact on their workforce. In UAE and anywhere in the world, redundancy of employee roles is a challenging and sensitive topic. In the UAE, the issue is even more complex as local labor and employment legislation, specifically Labor Law of 1980 No. 8, don’t set out statutory definition for redundancy. 

In an attempt at supporting the private sector employers from the lockdown measures, UAE authorities introduced redundancy in a ministerial resolution (Resolution no 279 of 2020). This means when an employer dismisses certain employees in order to save costs during a challenging economy, the termination of the employee is fair in the eyes of the law as there’s valid reason for the dismissal. 

A redundancy dismissal occurs when an employee is terminated in response to reduction in the individual’s role requirement. The termination is never the fault of an employee as the decision hasn’t been due to misconduct or poor performance. Instead, the dismissal of the employee, which should be properly spelled out, is due to changes in the workplace or the closing of a business entity entirely. 

Employers, as provided for by the local labor regulations, may terminate unlimited term contracts for employment if there’s a reason deemed valid by the authorities. The employees, however, are to be given a notice of termination of at least thirty calendar days. If the employment agreement requires a much longer notice of contract termination, then the agreement has to be followed. It’s important to note the fact that different rules can apply to termination of fixed term contracts for employment.

Redundancy pay for employees

It is not needed for employers to settle payments for redundancy; however, statutory payments which are standard for termination will be applicable in this case. They are as follows:

  • Notice pay – the minimum is thirty days and it is subject to employee completing his/her probationary period; 
  • Payment for untaken and accrued annual leave; 
  • End of service pay or gratuity – this is subject to employee completing at least a year of service with the employer; 
  • Repatriation flight – this is subject to employee receiving flights back to home country; 
  • Other payments as laid in the contract arising employment termination initiated by the employer

Compensation for employee arbitrary dismissal

In addition to payments mentioned above, labour courts in UAE may award employees compensation in relation to arbitrary dismissal. The compensation will be determined by the court and will apply if the dismissal was unlawful or unfair for an employee that’s one of the parties to an unlimited term agreement for employment. In such case, the court can award an employee renumeration of up to 3 months as compensation. 

A company that fails in engaging a reasonable process or retaining sufficient evidence which can support lawful dismissal of employee can face the risk of employee refusing visa cancellation and/or pursuing labor claims regarding arbitrary dismissal. 

Read more: Wrongful Termination in UAE: Compensation for Employees Under Arbitrary Dismissal

If an employer adopts an excellent process while retaining evidence that supports redundancy situation, it’s going to be in a position wherein it can defend any claim for arbitrary dismissal and mitigate level of compensation that will be awarded to an employee terminated. A safe practice that a business should adopt if it is operating in the UAE is planning the redundancy process in advance, as well as taking legal advice of HHS Lawyers in Dubai prior to embarking the redundancy procedure. 

Call us today if you wish to know more about employee redundancy in UAE.

What measures should an employer adapt if certain employees decline in comping to work because of COVID-19?

An employer in UAE would want to make sure that an employee is certainly ill and infected with coronavirus. This can be done by checking medical records. If the employee isn’t legitimately ill, then it can’t refuse coming into work and continuing to be absent. An unauthorized absence can provide employers rights in unilaterally terminating employment relationship.

Find more: Arbitrary Dismissal: Employee Contract Termination by Employer

Are employees in UAE entitled to sick leave?

 According to UAE labor law of 1986 No. 12 Article 83, employees in UAE are entitled to sick leave of no more than ninety days in a year and pay is calculated as follows: 

  • Full pay for the first 15 days 
  • Half pay for the following 30 days 
  • Without pay for the following periods
M. Al Khairy, LL.B. is a Senior Partner of HHS Lawyers in UAE. Practicing law for almost a decade, he has in-depth knowledge on UAE legislation with particular expertise on legal drafting, contract drafting, labor disputes, family law, and regulatory compliance for business organizations. Al Khairy also provides counsel on legal rights and obligations in the UAE to clients, including individuals and businesses subject to investigation or prosecution under Criminal Law by major regulators. Read more