RSM UAE

How to recover from a job loss

From coping with loans, rents and daily expenses to battling social stigma, family pressure and depression, it can be a huge struggle when you are laid off. But the key is to stay prepared and be practical

 

Dubai: Ashita is a single mother. A mid-level sales executive at a private company, she received a termination notice last October. She, along with four others, were being laid off as the company, suffering huge financial losses, decided to downsize.

“It was like a bolt from the blue. Fending for myself and my 16-year-old son all on my own had left me with no savings. I had taken a personal loan of Dh80,000 to pay for my son’s education and buy a car and there was no way I could repay the loan without a job. I could not return to India either unless I cleared the dues,” said the 40-year-old, recalling how she slid into depression but was lucky her friends helped her stay afloat. A year down the line, she is thankful she has found another job, albeit at a 30 per cent salary cut.

More recently, Alan, a senior media professional, also lost his job under similar circumstances. Three months on, he is still running from pillar to post trying to get a new placement. “I am desperate. My rent is due and I have a huge credit card loan to clear. It all happened so suddenly, I don’t know what I am going to do.”

Although such stories are common enough these days, few can come to terms with a job loss when it actually strikes them. From coping with loans, rents and daily expenses to battling social stigma, family pressure and depression, it can be a huge struggle. And as social workers add, many even end up on the wrong side of the law as they default on payments, do odd jobs or overstay in the country.

But can one protect oneself against a possible layoff? The answer is both yes and no.

Economic climate

According to experts, prepared-ness begins with an understanding of the global economic climate that is directly impacting jobs everywhere.

Baasab Deyb, partner, assurance and advisory at the audit major RSM Dahman, said, “Sustained low oil prices and erratic financial markets have impacted the global economy, forcing companies to balance their budgets, and the hammer has inevitably fallen on employees as companies downsize their workforces. There have been many job losses in recent times both globally and in the UAE. Publicly available data reveals that 1,500 jobs have been cut in the UAE banking sector since the beginning of 2016 alone, and market uncertainty has led to redundancies in other sectors like oil and gas, construction, tourism and retail.”

But just how fair are lay-offs, justified by companies, to unsuspecting employees? Gabriel Nathan, CEO and Founder of Nathan & Nathan, an HR outsourcing company, said, “From an employer’s perspective, the focus is on increased productivity and revenues while lowering costs and riding through the crisis in a planned manner. However, from an employee’s perspective, any impact on the job front is a major source of concern. Whilst professionalism is kept in perspective to address the rationale for separation, the impact on the job market is still considerable. It is in times like these that employees should upgrade their skills.”

Legal rights

Employees also need to know their legal rights. Reda Hegazy, Senior Legal Advisor and Arbitrator, Al Suwaidi & Company, said, “There is no specific article in the UAE Labour Law (Federal Law No. 8 of 1980) which prohibits an employer from terminating an employee’s services provided that the grounds are within the purview of the law. If the employer terminates the employee without legal grounds, it is an arbitrary dismissal and the employee has the right to claim compensation.”

He said, “Under the UAE Labour Law, there is a difference between a limited and unlimited employment contract. In a limited employment contract, the employee has the right to claim compensation which is determined on the basis of the wages due for a period of three months or for the remaining period of the contract, whichever is less, unless an article in the contract states otherwise. In an unlimited employment contract, it is within the court’s discretion to assess the amount of compensation based on the nature of the work, employment period, position of the employee and the circumstances surrounding the termination. The maximum that can be awarded to an employee in the case of an arbitrary dismissal claim is three months’ remuneration, calculated based on the last pay received by the employee prior to dismissal.”

Practical tips

Since no one is immune from layoffs, experts at Souqalmal.com said it makes sense to plan ahead. In a four step bounce back strategy (https://www.souqalmal.com/financial-education/ae-en/how-to-bounce-back-f...), they said the first task is to handle one’s emotions and stop feeling sorry, angry or helpless. The key is not to burn bridges with the employer. It’s good to negotiate a severance package and focus on the future. Requesting a later date of termination and visa cancellation also helps.

The next step is to “prepare a budget for the blow” by cutting down expenses. Austerity measures like cancelling cable and movie subscriptions and reducing data and cell phone plans could be considered. It’s important to take the family into confidence.

The trickiest part perhaps has to do with handling payments. “It’s never wise to let bills go unpaid, but if you’re in a money crunch, know which ones to pay first. Your priorities are rent or mortgage, utility, food and health,” according to Souqalmal.com. Interestingly their advice is not to pay off debts right away. “The psychological weight of debts often tempts people to pay them off and shut accounts. But most financial experts recommend against this. Not only are you dipping into survival savings, but if you need more money you won’t get a new loan – since your credit worthiness is compromised without a job.”

They advise considering a discussion with banks on minimum or freezing of payments for a few months and checking if your loan can be restructured to make payments more affordable.

Last but not least, it pays to have a proactive and positive mindset, whilst also networking smartly.

Unfairly terminated? Here’s what you can do

According to Reda Hegazy, senior legal advisor and arbitrator, Al Suwaidi & Company, an employee can submit a labour complaint before the Ministry of Labour (now Ministry of Human Resources & Emiratisation) or to the relevant Free Zone Authority to claim his labour entitlements. If the Ministry of Labour or the Free Zone Authority fails to settle the labour dispute amicably between the parties, then it has to refer the dispute to the Labour Court. The Labour Court will then hear the case and render its judgment whether or not the employee is entitled to compensation.

 

Appearing in Xpress Dubai and Abu Dhabi, on August 8, 2017 - click here to read more

How can we help you?

Contact us by phone +971 4 554 7423 or submit your questions, comments, or proposal requests.

Email us