Ask the law: Change in terms of employment

A reader from Dubai asks: We are a group of employees working in a private contracting company. Two months ago, the owner sold the company. The new employer told us that he will sign new contracts with the employees. He said the previous contract will be considered invalid as of the date of selling the company. The new employer says that, according to the labour law, he is entitled to change the previous employment contracts as he wants to change the contract from a limited period to an unlimited period. He is also going to reduce salary by 25 per cent as per company policy. What does the labour law say in this matter? Is the new employer entitled to change employment contracts and force employees to accept a reduced salary?

I would like to clarify to the questioner that the Federal Labour Law No 8 of 1980, Article no 126 states the following: “Where a change occurs in the form or legal status of the establishment, contracts of employment that are valid at the time of the change shall remain in force between the new employer and the workers of the establishment, and their service shall be deemed to be continuous. Both the original employer and the new employer shall be jointly liable for a period of six months for the discharge of any obligations resulting from contracts of employment during the period preceding the change; after the expiry of this period the new employer shall solely bear liability.”

Finally, as per the said articles and as per Dubai Supreme Court, the new employer has no right to oblige the employee to make him accept to change the previous labour contract and also forced him to accept salary reduction. Changing the labour contract terms and conditions required mutual agreement between the employer and the employee.

Terms of resignation

A reader from Dubai asks: I am a woman working in a company for one-and-a-half years under a limited period contract, which expires in three months. I am on my husband’s sponsorship and I have a work permit from the Ministry of Labour. Can I resign immediately or do I have to give one-month notice to the company as per the labour law? In case the company does not accept my resignation, will the Ministry of Labour impose a ban on me although I am on my husband’s sponsorship? As per the labour law, what are my rights with regard to end-of-service gratuity? In case a ban is imposed by the Ministry of Labour, do I need to leave the country?

I would like to clarify to the questioner that she is working on a limited period contract. If the contract is terminated pre-term, she will lose her labour rights, except for the right related to leave. In addition to that she might be directed to compensate the employer an amount equivalent to her 45-day salary if the employer proves that he suffered a loss or the company is affected by the employee’s decision to terminate the contract. Finally, the employer might request the Ministry of Labour to impose a one-year ban on the questioner due to her violating the labour law, even if she is not under the company’s sponsorship. Finally, in case the ministry imposes a one-year ban, the questioner will not be directed to leave the country. Such a ban is only a work ban, which means that she can’t work in the country with any company under Ministry of Labour rules.

Ask the Law questions answered by advocate Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.