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UAE COVID-19: Ways of Managing Employees’ Wages During the Pandemic

Economic downturns are especially difficult for startups. Twenty to thirty percent of small business in the UAE which exist now won’t be around by 2021 or even the end of this year due to the coronavirus (COVID-19) pandemic. 

The best way in which a startup can survive any economic downturn is by pulling together as one team of colleagues. If your small business is already doing this internally, then you are already on your way to surviving the crisis. Kudos! 

Of course, there can be hiring freezes, furloughs, salary cuts, and even layoffs which can be extra hard for a business. With the global pandemic that’s affected everyone, letting people go can feel like you are turning them loose to a chaotic world with nothing, most especially when health care is provided for by employers in UAE. 

In this article, we will provide you with ways in managing your business during the pandemic so the business is kept afloat and everyone retains their job – or at least the key employees, if possible. 

Hit pause as soon as possible!

Pause every single aspect of the business that is absolutely unnecessary. Experts suggest small business owners to hit pause on acquiring new equipment or new software. Those interesting ideas would have to wait even when they will make money someday. Pause on the hiring unless you’re building or developing new ventilators, it’s not the time for your business to expand. 

you may want to know: COVID-19: A valid reason to avoid contractual obligations?

Remember that revenue is everything

Everyone is currently witnessing the drying up of investment. Angel investment’s always the first thing to disappear during crises because they are when investors witness their worth falling together with the health of the stock market. If you have a deal for investment in the process, then it has to be completed as soon as possible. Get it done as quickly as you can and accept the terms. Same goes for a merger or acquisition.

  • This is the best time for you to focus on the company’s revenue. Will you be able to consult?
  • Is there a new service that you will be able to offer?
  • Is there something that you can do today or soon where you would not be relying on a twelve- or twenty-four-month product cycle?
  • Is there a way for you to insulate the company and yourself?

In good times, small businesses attract investment only one promises and wishes. However, that is certainly not the case today. You would need solid revenue in making it to the following quarter. 

Read More: Making Employee Roles Redundant Due to COVID-19

Carefully cut the wages of Employees

It’s possible for your business to cut the salaries of the employees instantly; however, that won’t keep morale high. It can, of course, keep the business afloat. In order to cut wages and still make everyone you have employed understand the situation, you first need to get the leaders or managers of your teams together. Have the personal financials of the company employees on the table. Assess how much is needed in getting from this month to the next payday. We also suggest to cut leadership salaries. 

Then, it is the time to inform the entire business of what is going on. Allow time for information to absorb. What you will be doing can build trust within the organization. Salaries of managers and leaders are often the highest, so they are the ones that you can loosen up on a regular basis until the company has returned to its pre-pandemic condition. 

It’s possible that this isn’t enough for the business to stay afloat. After a week or a couple of days where the situation is rapidly changing, talk to the team and tell them why extra cuts are to be made. There is a need for everyone in the business to know you are making sure they still have jobs which is why the wages are cut. Promise that when everything goes back to normal, the wages will rise back up with theirs as the priority. 

The results, trust us, can be pretty amazing. Create this bunker mentality where everyone is in it together as it can be powerful. Place your funds where the values are and everyone else 4 will follow your leadership.              

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

When there’s a need to cut, cut big!

A huge cut is always better in comparison to several small ones, most especially when you’ve explained a situation clearly. Perhaps you are cutting on the areas that are not generating income so other parts will be able to survive. Perhaps you are also taking the business back to a much simpler time wherein it only had a single product and it did incredibly well. 

What you want following the cut would be for remaining staff members to feel secure while focusing on their work. If you cut a few employees each week, there won’t be anything accomplished as they’ll be busy polishing resumes. 

If you want to discuss with experts on company restructuring in UAE, Consult with us here in HHS Lawyers in Dubai

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