Labour Law states no clear rules for redundancy pay

Just a few days ago, my HR manager told me the company is cutting costs, which will result in the termination of some employees, including me. What is the notice period? And do I get three months’ pay?

I have been working as a project engineer in a free zone company in Ras Al Khaimah. Just a few days ago, my HR manager told me the company is cutting costs, which will result in the termination of some employees, including me. I have a RAK free trade zone visa, which is valid for another full year. What is the notice period? And do I get three months' pay? ST, RAK

Under the UAE Labour Law, all employees must be given the appropriate amount of notice once they are permanently employed and out of their probationary period. This is a minimum of 30 days per Article 117, but can be longer if stated in the contract of employment provided at outset and agreed by both parties. There is no provision for redundancy pay in the Labour Law, although some employers choose to make an additional payment, this is not common. There is a clause, Article 122, in respect to arbitrary dismissal, which can allow for an additional payment to be made but this is not likely to be upheld if a company is making a significant number of employees redundant. One other reason a person can be entitled to an additional payment is if they are on a limited contract. Article 115 states: “should the employment contract be of a determined term … he shall be bound to compensate the worker for the damage incurred thereto, provided that the compensation amount does not exceed in any case the total wage due for the period of three months or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract”. Upon termination of employment, the residency visa is also cancelled, so the validity becomes irrelevant.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at [e-mail]. Follow her on Twitter at @FinancialUAE.

The advice provided in our columns does not constitute legal advice and is provided for information only.

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