A spotlight on Dubai
We have significant experience in providing strategic legal support for matters in jurisdictions all over the world. The following snapshot is an example of a recent issue we have dealt with in Dubai.
Employee Entitlements and Ex-pats
Although a dismissal of an employee in Dubai tends to be more straightforward than in many other jurisdictions (particularly for those based outside of the DIFC free zone), there are a number of additional factors that need to be considered when going through this process. In particular, there are a prescriptive number of mandatory payments that must be made which will be alien to those not used to working within Dubai. For example, there is no state pension in Dubai, instead, there is “End of Service Gratuity” which employees with one year’s service or more are entitled to on termination of employment. This can present an unwelcome additional cost that the employer has not budgeted for, but it is a mandatory payment that cannot be avoided. So, it is important to be aware of the relevant entitlements and factor them into any budgeting considerations.
Also, as there are a high proportion of ex-pat employees in Dubai, it is important that employers are aware of the requirements for cancelling or transferring employment visas and sponsorships, as there are certain timescales and requirements that must be met. Getting these issues wrong because of a lack of awareness or planning could impact future ex-pat hires or the ease with which sponsorships are approved.
We have assisted with some tricky cases recently where ex-pat hires have not worked out in Dubai (partly because of a poor understanding of the local culture by those employees). In these cases exit entitlements, sponsorships, the business’s reputation in the local market and potential tax consequences of returning the employees home all interplayed together. With our assistance, the employer was able to navigate these difficult competing considerations and achieve smooth exits with minimal fallout.