Questions & Answers
Status of the employment contract when new owners take over
Hi Sir,
I have been working in a company since Jan of 2015.
On the 2nd quarter of 2017, the company was sold. All employees remained. So, we are still with the company but with new owners.
This year, they changed the name of the company. Our contracts here expired last December. We are now waiting for our new contracts to be signed. It's taking awhile.
Today, I was asked to sign a job offer dated Jan 2018. I am on husband visa. Isn't a job offer only for new employees?
I am not new, we only have a new owner and a new company name. If I sign this job offer, does it mean I am a new employee and not an old employee who started in 2015?
Hope you can help me. And is this a new requirement in Dubai? Even for those who are already on husband visa?
Thank you.
Dear Questioner,
Please note that selling the company and changing its name does not require any of the proposed changes such as issuing new employment contracts or changing the labour card.
Your employment should remain valid and continuous as long as both parties agree to its continuation.
If your employer wishes not to continue with the same terms they have to negotiate such new terms with you.
If the employer wishes to establish a new contract, they must offer you the payment of the end of service entitlements as per the 2015-2018 period. Being on a husband visa changes nothing of the above.
Regards,
Ahmed Elnaggar
A company is a separate distinct legal entity independent from its owners.
Even if the company changes its name or the owners, the trade license number remains the same. You can check it to reaffirm.
They are trying to streamline the system and in particular, since your contract (I presumed was a limited contract) expired in December, therefore, cannot be renewed now. So a fresh contract is required.
It depends. Sometimes the new owners play mischief, saying they are not responsible for the gratuity payment payable by the old employer.
They claim their contract with you starts on the day the NEW contract is signed with them, and you at that time you can use Article 126. You could clarify your concerns with them.
Article no. 126 Federal Labour Law no. 8 of 1980, covers the issue of the change in ownership. It states the following:
- If there is a change in ownership, the service of the employee shall be deemed to be continuous.
- Original employer and the new employer shall be jointly liable for six months for obligations.
- After the period of six months, the new owner shall be liable.
Article 126
“Where a change occurs in the form or legal status of the establishment, contracts of employment that are valid at 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”.
