Q: The company I work for was sold at a loss. The employer is saying that the employees need to accept a reduction in their payouts… A: If you resign, you will get the full payout including gratuity. Challenging the reduction on the basis that the company is at a loss will not guarantee you success…

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Filing a case against an employer because of payout reduction

The company I work for was sold at a loss. The employer is saying that the employees need to accept a reduction in their payouts to share the burden.

The employer is not based in the UAE. If I go to court and win, what can I do to ensure that the employer will pay if he is not based in the UAE and he says that he does not have money to pay?

Santanu Ghosh

Ibrahim Al Banna Advocates & Legal Consultants

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7 Mar 2020, 19:23

If you resign, you will get the full payout including gratuity. Challenging the reduction on the basis that the company is at a loss will not guarantee you success in the court.

UAE Labour Law recognizes loss of profits as one of the grounds of reduction of salary as well as termination.

On the other hand, if the employer has no money, then his assets, if any, can be attached in execution. Otherwise, if he has nothing at all, chances of getting any money are almost NIL.

Regards!

8 Mar 2020, 04:28

Does this mean local assets only or international ones?

Would they have to declare for bankruptcy to have this happen and go on that process?

8 Mar 2020, 04:46

It will only be local. The bankruptcy process is not automatic. The debtor has to apply for that and based on several criteria, it is decided.

8 Mar 2020, 05:00

Thanks, you have been really helpful.

Is there a way to know how many months this would take in court?

8 Mar 2020, 06:53

The bankruptcy proceedings take time because a liquidator will be appointed to check all financials and submit to the court. It can be three to four months as a minimum.

Regards!

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